BBDO

[Interpreted] Good morning, everyone. I am Marcelo Noronha. I'm here live from Cidade de Deus, the headquarter of Bradesco for this earnings release presentation related to the fourth quarter of 2025. And why not saying of the full year of 2025 today is February 6 and my watch shows 10:31 a.m. I'll start with presentation saying that all of this material has been released last night after the market closing and I think you had access to it. And I start with our recurring net income, BRL 6.5 billion growing 20.6% year-on-year, and BRL 24.7 billion for the full year 26.1% growth and however, with an ROAE of 15.2% exceeding our cost of capital for the first time in this quarter. And that's why we say that we will continue to grow our ROAE for the coming quarters and years to come. Here, I have all of the operating highlights. I'm not going to go over each one of them because I will show -- I will certainly change a little bit today's presentation, and I would like to bring you some elements related to our transformation plan that in fact was published February 7, 2024, so less than 2 years ago, it will the 2 years as of tomorrow. So that's when we released the plan. And I would just like to remind you of what we did back then. So we started with a diagnosis at Banco Bradesco the Brazilian market, and also, we drew up a worldwide benchmark with all of the relevant aspects like technology. Out of the diagnosis, we drew up a plan knowing all of our strengths. The plan -- the bank has several strengths, and the organization as a whole for that matter. Back then, we said that we have 70 million clients. We also said that we were leaders in SMEs. SMEs understood as a segment defined by the Central Bank because every bank has its own format. These are companies that grows up to BRL 300 million a year. We also said that there was high penetration in the high income segment. And certainly, we have the largest insurance group in Latin America, in addition to having a stake in many other companies. And we also said that we will work on our strength to create a new position with the clear goal to increase competitiveness in the short and long run. But it's important to remember that we put a deadline of up to 5 years. It wouldn't happen overnight. And it hasn't even been 2 years. When we presented the plan, we came up with this [ mandala ] with all the main topics, the 10 main items that were carefully looked at with more than 200 new initiatives. I will go over some of them, I will not talk about all of them or all of that, otherwise, we will be here for 2 hours, and you will be really tired. But our IR team and the transformation office, everybody is available to give you further clarification, especially those that want to talk to investors, to discuss some particular area of this [ mandala ] -- and if you have additional questions, we are certainly at your disposal. So I'll briefly cover some of the most important highlights and then I'll go back to the core numbers, and we wrap up the presentation. So then after the presentation we have the Q&A. Well starting with digital retail. We haven't been bringing a lot of elements for you, but after this period at year-end, we came up with 19 million clients fully digital. They are fully assisted through the digital channel with our BIA GenAI with the level of resolution, which is very high. So BIA is retaining 90% of all calls that comes through digital retail, but it's also important to look at the engagement level. Our efficiency in this client life cycle that allow us to -- I mean, I'm not going to get into the details of every topic. But I would like to draw your attention to this item here down below. The direct cost to serve to all of these clients in the digital platform that was reduced by 40x. This is an important number. And what we envision for 2026 vis-a-vis our digital retail. First, we go from 19 million to approximately 40 million clients between account holders and non-account holders. And certainly our objective, not only for 2026, but going forward is to reduce the cost of -- cost to serve and to continue growing our customer base. The second topic is affluent clients, and we are talking about principal and prime segments. We promoted an upgrade to more than 3.1 million clients with a new value proposition. And at the same time, we introduced a new position in this segment of clients. Prime ended the year of 2.3 million clients. We trained 3,500 managers, we focus on that training. But notice the level of accuracy for BIA team. It's accuracy was 93% at BIA customers, and then i go to Principal. You may recall that we launched principal in November 2024, with 3 offices, one in Faria Lima, another one in Campinas and the other one in Leblon in Rio. And then we started the expansion process. In fact, I invited sell-side and buy-side clients to look at our management model rather than just the business model. So we are just going through this phase in other segments. So we launched a new segment in November of '24. By the end of last year, we had 62 offices and 36 municipalities approximately 320,000 clients in this segment with this current level of NPS, so a new value proposition. And this created this new differential. And what do we expect to see next year out of these 2 affluent segment. I mean, new upgrade with more than 1.5 million clients reaching 4,700,000 clients. And as for principle, we will open almost 50 additional offices in Sao Paulo, reaching 70 municipalities, and we will have almost 800,000 clients by the end of the year. But you might recall our target because it's not something that we change overnight because this is gradually build. So we will expand our share of wallet, and this is what you see down below when it comes to the affluent segment. And next comes SMEs. As I said at the beginning, we were market leaders. We had approximately 14.3% market share in SMEs of almost BRL 300 million a year. But notice what happen here. We've built a much more robust segment with a new digital model with a new value proposition. So mostly digital and remote service and also companies and business segment. This is a segment where we introduced 150 new branches during 2024, and we changed the segmentation of the business segment. The configuration of the management model for managers, we delivered a new Internet Banking an new app for companies and look at what happened to our NPS. These are numbers that were not disclosed before. We went from 56 to 74 points. So I'd like to say that nothing happens by divine order, it happens because we work hard in the backdrop and we execute based on the plan. But I will draw your attention to say that we have more than 5,000 managers in this segment. And we are present in 2,100 service points, and this adds value to clients. Regardless of having this level of evaluation in metrics with a robust capacity to serve clients because they can't do self-service and at the same time, have a very good experience. But we can still serve these clients in the physical channels. But I would like to draw your attention to something that I said at the beginning. We had 14.3% share. We are leaders in this market, but what happened up to September 2025. We gained market share. We reached 16.6% market share, and we continue on the right track in terms of this segment. Our purpose, not only for 2026, but for a more distant future is to increase our penetration in these segments. And we believe in this was stated in the diagnosis that in this segment of up to 300,000 a year of SMEs, it's a segment that tends to increase its share in the financial system in the next coming years up to BRL 300 million a year. And I mean, payments and cash. I'm not going to get into many details, but Bradesco Global Solutions with global cash, and obviously, our goal is to increase the share of wallet and customer centricity through time. I mean credit we introduced a credit view. Of course, I will talk about cause and effect, because as I said, things don't happen by divine chance. We introduced the credit BU at the beginning of our plan, and we thinned this business unit. We introduced a portfolio management area. They are working on different client segments. And they are also operating in the life portfolio, be it in Wholesale and Retail bank, Customer Finance, et cetera. So within this business unit, we also introduced a new pricing area to serve all segments and businesses, all the verticals I mentioned to you before, and all of them to generate more risk-adjusted return, and this is a very important part of our strategy. But when we put this together I told Andre that we wouldn't get any lack of resources. There will be enough resources. So to that end, we hired 250 professionals and we gave them full technology support to enhance the models for all customer segments, also to manage the portfolios. And looking at the time line of credits and loans that are not only decided on prediction models, but mostly decided by human judgment, and then support all of it, and the consequence is -- that this SME growth level is still the same that we have with payroll loans. And if we hadn't put this together in the way it is, certainly, we wouldn't be growing SMEs the way we've been growing today and the way we grew in 2025. And what do we expect in terms of our objectives. This unit together with the clients segment. We want more competitiveness in some lines and segments, but growth with quality and moreover, a very strict risk adjusted returns. We have also many other initiatives. Maybe there is one that will take longer to deliver. But our clear objective is not only to have back office and front office. But moreover, having an end-to-end experience that we really boost our productivity. I mean, model culture, in addition to the area led by Silvana, which is people -- they are contributing with up-skilling, re-skilling. And despite everything we are doing including new variable compensation KPIs, et cetera, we conducted a new survey new engagement survey, 84% engagement when compared to 74% postpaid in the survey of 2024. And that's why we are focused on keeping a very engaged team and fully committed to everything we want to do with the capacity to change as well and adjust. People are crucial, competent teams and teams that can certainly deliver and change as we go so that we can deliver more competitive goals in the short and long run. So organizational structure was the first thing I showed during the plan. So we reduced layers. We reduced the span of control -- I mean we increased the span of control. And -- we brought C-levels and Directors to different areas. I talked about the credit area more recently, but we also promoted inorganic growth. I'm not going to get into the details, but in the Insurance company as well with the hospitals. And what do we expect out of this organizational structure. To gain more efficiency and agility, when it comes to decision making. Technology. This is a chapter that I've been talking about all the time for investments in AI. For us our culture is AI first. AI first and AI is not just GenAI, but it's machine learning for our mathematical models, but also multi-agents who have been working with a number of initiatives on the slide, I spoke about BIA client with that level of retention using GenAI. But we have the BIA Core, BIA Tech and BIA Client so on and so forth. So what happened in these 2-year period. We gained productivity. We reduced lead time and the consequences was this that I mentioned before. With a base of 100 of delivery of apps for clients internally for review processes, and gaining productivity of a regulatory points we ended 2025 with 300. We grew our capacity by 3x over -- less than 2 years. That's when we started this whole move. We invested and we've invested in cybersecurity. We have -- we improved our second and third lines of defense for cyber, and we expect greater productivity gain. More and more intensive GenAI use, but more competitiveness, and innovation and time to market. And I'd like to mention some other things here because I'm going to get to the numbers in a minute and we'll speak about guidance eventually. But we invested last year, invested heavily in technology. Investment in technology grew in 2025 compared to 2024 by 22%. And if you look at our guidance, which I will refer to in a minute of those about 8% of growth approximately, about 3% or slightly over 3% come from the investments that we will continue to make. We will not give up on investing. I see technology is a big driver of our productivity and our ability to deliver a lot more to tech clients with hyper personalization, which we have been doing, and during the Q&A, we can speak more about that. Synergies and Innovations. We had a number of actions with Cielo. Tap-on-phone, D+0 receivables discount all invented in our corporate app. In Bradesco Financiamentos, we also gained investment with new hiring, not just efficiency in the unit cost, but commercial efficiency of Bradesco Financiamentos. And what are the next steps, we expect -- well, with the next step to increase our share of wallet, increase growth, productivity and innovation with different verticals that we have in our organization. And now speaking again about profitability to give you more numbers. I mentioned that before, and feel free because our team is ready to talk with you and explain this in much more detail. If we look at the net income. I always tell my team, this should be the last slide and not in the first because again, we speak here about the cost and effect and this is the effect. Effect of what? Effect of a plan that is been executed and that is showing how our capacity revealing and improving, the strengths that we talked about, but strengths that were driven by actions of the plan and we have a growing number. 8 quarters delivering always a little bit more and step by step, we don't change these strategic plan overnight. You correct of course. You correct the tactics, but there is a strategic continuity, with execution discipline. And this is -- it called also discipline, we are showing this with our the team in the transformation office. Moving to total revenues. We are growing in all revenues. NII, we see here, the growth in NII and fee and commission income. When we remove the Cielo tender offer, the growth is 5.5%. Insurance investment plans of 16.1%, another robust quarter and growth expectation. But why is all the revenue growing? Again comes into the effect. It's not by divining profit. It's by increased penetration, credit trading traction in NII, a reduction of liabilities cost better liability management and so on and so forth. With all the initiatives adopted. Looking at our loan portfolio almost BRL 1.1 billion in December 2025, and the previous quarter, we were at BRL 9.6 billion and now BRL 11 billion. The highlight goes to micro-small medium-sized companies growing 21.3%, and that's why we're gaining share. And by looking at all of the portfolios, we are growing in all of them. Again, why are we growing? We are growing because we have a client base. We've grown because we have high penetration in all client segments, and in the verticals that we work with, and so when this supported, because we have an engaged team. A team that was supported by client management systems, GenAI, a better offering for clients. In a nutshell, it is a set of measure that we improved over this period. And looking at the portfolio, and the loan quality indicators they are all flat over 90-day NPLs totally easy. Over 15 days, if we look on the slide, it's absolutely flat, we structured our portfolio with the BRL 10.5 billion in 2025. BRL 20.5 billion reduction of problematic assets. Look at our stages. Stage 3 dropping quarter-after-quarter. Stage 1 increasing quarter-after-quarter with the evolution of the secured portfolio. So we are totally at ease with our loan portfolio and with our ability to continue to originate even more and particularly with some levers. Net interest income 14.9% increased and the client NII up 17.4%. Again, this is we see 17.4% to growth, in here, this hits the bottom line, BRL 4.8 billion to BRL 10.3 billion, growing 22.6%. Cost of risk, absolutely under control and quite and market NII delivering our expectation -- expectation of our treasury. Fee and commission income grew at the proportion that I mentioned before, but please note I should highlight 3 card income 14.4% increase in high income 25%. Construction management. There is a lot of traction, growing 17.3%. When we look at loan operations, we have a lot of traction as well. Why is it not growing? Because part of it has been deferred because of the Resolution 4,966. But look at what happened with capital markets. 29.2% increase full year '25 compared to full year '24. This was not divine providence again, this is investment. We changed the structure with Bruno's team and the whole team, we created the agribusiness segment. We changed our investment banking structure to broaden Bradesco's team and capture a lot more in DCM, M&A and other line items such as project finance. The result is this level of growth. We have a DCM share, that we had in 2022. So we grew, we're doing well in the rankings, and we continue to grow. But there are 2 offenders here that do not help these levers, which are checking account and collection, which normally in this market pull the results down. But overall, we are delivering and we're delivering well. Operating expenses, 8.5% increase. I told you and I will repeat it. Investments in technology. We grew 22% of technology investments in 2025 compared to 2024. And we will continue to invest in technology. But if we break our expenses down into personnel and administrative, where we grew 5% in line with the average IPCA. POR is one of defect on expenses with our profit sharing patent, this would be 2.5%. We continue to reduce our footprint -- if we look at the complete period. 2,800 points, and if we exclude EloPar and Cielo as we have been doing in past quarters, growth of operating expenses would be 7.2%. But in the Q&A, if you want you can ask and we can debate administrative expenses, but overall growth was negative. We have personal expenses with this variable that I mentioned, the profit sharing program and investments in technology, in transformation. For example the whole implementation of the 59 Principal office almost 50 more will be added next year, so we continue to invest in reviewing our footprint and focusing on the necessary investments in each one of the departments to help us grow. Our Insurance growth, another strength of our organization. ROE 24.3%, but in the full [indiscernible] 22%, spoke about this already. We are growing in all lines with a lot of balance. Client base growing. I was checking this with Ivan earlier today. The result of insurance operations exceeding the guidance of 16.1% and growth in operating results, and not necessarily in financial results, with technical provisions of 446% (sic) [ BRL 446 billion ] growing more than 10% year-on-year. Moving to the end of my presentation. When we'll look at this capital discipline. We have year-on-year growth, if we look at December 2024 compared to December 2025 in Tier 1, 12.4% to 13.2% and the quarter there is a slight reduction of 20 basis points in common equity in Tier 1, but if we look at common equity we also posted growth year-on-year up 0.7 percentage points and this is something that I mentioned with all of you with the sell-side, with the buy-side. I spoke about this that we have this under control. And lastly on guidance. Well we delivered at the top of the guidance impacting all items in expanded loan portfolio we were growing 9.6% in September and we ended up with 11% good, because of our traction and the ability to execute. We start 2026 with even more traction. Insurance operations 16.1% beyond the guidance and we have the guidance for 2026 listed here. I am here and I'm ready to discuss this with you and now I will sit down with my colleagues Andre Carvalho IR Officer and Cassiano for us to start our Q&A. But I would end my speech saying that we have heard comments since last night, when we released the results, post the results, some positive comments regarding the 2025 numbers. I didn't hear anyone saying bad things, negative things, but the expectations were much higher for our 2026 guidance. Our share between December 31, 2024, and today is Feb, 6 had increased 106%. Appreciated a 106% -- so it is only natural, its part of the game of sell-side, buy-side to have price adjustments. Not 29%, it's 27.5%, of the middle of the guidance, it's up to you, but we will not loose sight of our horizon because the shares have to be adjusted by 5%, no problems. Can you imagine today with the level of conviction that we have, with the level of the delivery that we have, I am super confident in our organization. I'm happy. I had the meeting yesterday with our leadership team with the level of engagement we have in our company. So Andre over to you. Thank you very much for joining us in this call.

[Interpreted] Good morning, everyone. Thank you, Marcelo and Cassiano. I would like to let you know that Ivan Gontijo, CEO of our Insurance company is joining us remotely. To start the Q&A session, I would like to present 3 alternative for questions. [Operator Instructions] The first question comes from Pedro Leduc from Itau BBA.

[Interpreted] Good morning, everyone. Thank you for the presentation and congratulations on this wonderful year in your trajectory. My question is related to how you see the underlying business trends? So we could look at the NII guidance, less LLP. I mean I think you're going to grow low 2-digits, slightly above the portfolio. I just want to understand what's behind it when we think about NII in isolation or LLP, I think these 2 things have to talk to one another, but to understand what is part of it, so that I will have a good idea of your views about mix, spread, credit quality as you know, the year is just beginning.

[Interpreted] Okay. Pedro I will start, Cassiano will start as well. It's good to see you again, Pedro. Our NII remains focused on our standard. We changed our mix for 2025. Secured products remains our main lever. Obviously, the quality of our credit BU allows us to work in any credit line secured and unsecured we're very, very comfortable with the quality of our portfolio and the way we are operating it. The average rate should be maintained until the end of the year. And our LLP should grow in line with our operational. These are the main drivers of our NII, and we will maintain it with a very high degree of engagement.

[Interpreted] Okay. I have a few things to add. It's important to say and highlight what you just said. Portfolio mix, spread level, always focusing on risk adjusted return. This is the goal, and I also talked about pricing. The pricing area comes to reinstate that point. I mean we have some very important levers that go through different segments like payroll loans in all of its lines I'm talking about public and INSS and private. We have approximately slightly above 14% market share. But I would like to remind you that we have the lowest market share on the private side. So we have a lot of opportunities, and we already saw this level of growth. And I would just like to add that we are I mean, we are placing our hiring offering. It's 24/7. And this is hyper customized with microseconds, that go and come and already respond, give us a response about the risk of the borrower, the company and pricing, which is adjusted to risk, it's risk-adjusted pricing. Therefore, I'm saying that we will grow in payroll loans. We see a lot of traction coming from the clients. INSS has its own challenges, market challenges. It's not all ours, but in previous quarters, year-over-year, we were growing 5%. And now in this past quarter, we grew 6.8%. But this is payroll loan, SME, we are still growing, and we will continue to grow in lines with secure lines backed by receivables, be it direct receivables or some lien, et cetera. So we will grow with auto for companies and individuals. We are very optimistic in terms of future growth with the credit quality that it's absolutely under control. I do not see any deviations. We are not concerned with that, because certainly, you know that we did our homework, when it comes to portfolio management and our modelings team. And then you also mentioned an important aspect. You talked about NII growing slightly above the portfolio. Well, this has to do with the mix. We are a wholesale bank, we can fluctuate as it happened this quarter on the positive side, but it could also fluctuate on the negative side because we do the turnover of the portfolio.

[Interpreted] And the next question is from Mario Pierry with Bank of America.

[Interpreted] Congratulations on your results. We understand that a lot has been done in the first 2 years, but you still have a lot more to do going forward. But what you have already demonstrated is that you are on the right track. Right. I have 2 questions. You had an additional expense of BRL 700 million. You spent that to restructure and the structure that is suggested for 2026. And this is almost twice as much in terms of provisions you posted last year. So could you please highlight where these restructuring will focus more, whether it has to do with the number of branches? And we understand that we are getting a lot of questions from our clients. Your guidance says that you will grow expenses by 8% at the top you said it's 3% relates to investments and technology. This also means that the rest of the bank will grow or is growing 5%, in line with inflation. And just like you said, you already reduced -- 2,800 points in the past 2 years. So how come expenses are not growing below inflation? That's why the consensus, I was hoping for a number close to BRL 20 million rather than BRL 27.5 million. We thought that the bank's core expense should be growing below inflation?

[Interpreted] Well, thank you for your questions. If you look at our admin expenses, and if you look at some of the lines in our full publication, you will see, okay, third-party services, maintenance, conservation, lease, all of these lines were down and transportation, transportation of currency. So what are the detractors here? I'm just summarizing, there are some that are very positive. But technology, I mean, it grew 22%. And when we look at it, it will continue to grow. We will continue to invest, to increase our competitiveness. Second, I mean, profit sharing, we increased profit, and we paid out more. And the third detractor. I'm not going to refer to small lines. We had some changes on the advertising side. But we found 3 good opportunities at the end of the year, and we decided to invest like when we launched Principal. And that's when we did the coverage at the airports. It's out of what we expect us to do at that time. And thirdly, there are other expenses that also go through some lawsuits, we have a very good provision coverage. We've been working a lot based on this root causes. And when you work in that root cause, you do not expand the incoming, but that is coming down with time. So I believe that these lines will be below 27%, 28%. And this is what you look at when you look at expenses or other expenses in addition to expenses with technology. And talking about investments in restructuring, I would tell you that, first of all, we continue to review the footprint. We were doing less than -- less than what we would do in 2025. And so we will do more than what we did last year. But we will open, as I said before, about 50 offices earmarked for Principal. But we are also refurbishing some physical stores with private, meaning that we continue to invest in this transformation, making footprint adjustments also increasing our capacity to invest more and reduce cost to serve, in Retail and Digital. So our cost is 40x lower.

[Interpreted] Well, thank you for your question. There is one more thing I would like to add in addition to the 3% you mentioned in terms of technology investment. 5% is only related to human resources. Well, that's important to remember, in addition to profit shares. You will see that our expenses are very much under control. There is one more thing because you said that was twice as what it was last year. If you look at 2024, it's very close to the number that we posted in 2024. Maybe the difference is about BRL 100 million. 40% higher on average or greater than average. There is another point related to efficiency. Our efficiency ratio was down by 2.2%, from 2.2% to 50%. So our ambition is to reach 40% by 2028, meaning that the trend is downwards in 2026, and this drop will be even more accentuated in '27 '28, when the top line grows a lots, it's just natural that some OpEx to see growth with OpEx. And our top line growth will be almost 10% in 2026. Also, as you increase transactional, certainly the variable cost I mean it's different even with scale.

Next question is from Gustavo Schroden with Citi.

[Interpreted] Congratulations on resuming ROAE starting from 10% to 12% now over 15%. I would like to think a little about the investment cycle, more specifically and linking with operating efficiency and efficiency ratio. Marcelo you're very clearly showing, and I heard an interview you gave, when you said that you won't stop in investing, but the focus is to maintain competitiveness. And is that you're thinking about the future of the bank in a sustained fashion. So I'd like to understand, what part of the cycle would you say the bank is in? Particularly in terms of technology investments or investments in new product or segments? And should we start thinking -- should we start thinking about the benefits coming from operating leverage operating efficiency, and reducing efficiency ratio, thinking that in 2026 revenue should continue to support the step-by-step ROAE improvement, so that in '27, we'll start seeing the benefits of operating efficiencies?

[Interpreted] Gustavo, I would say that we are in the middle of the cycle. We are not at the end of the cycle. If you look at our plan, we spoke about stretching this until 2028. And along that period, some things are quick wins. You capture the benefits in the short term. Other things we invest in and you're going to reap the fruits later. We'll continue to invest in the whole renovation of the bank. Look at some U.S banks and Asian banks and what they have been seeing in September, I was in Asia I had an opportunity to talk with CEOs of other Asian organizations and to speak with peers of that region, and everyone is investing again in AI first, we see opportunities to improve efficiency and to gain competitiveness in our relationship with our clients. I will not stop investing. We want to improve our infrastructure, our architecture constantly in terms of technology. So efficiency doesn't come only because we're going to invest less -- and I'm going to give you my opinion. In the opinion of all world banks. I don't see anyone stopping investing in technology. Technology will require growing constant investing over time. That's my opinion. But we're going to gaining in other lines. For example, loss expense and areas, where we are going to have a reduction not only in 2026. So we have to have efficiency gains, and we will have these efficiency gains -- but this will be driven to the top line. Gustavo, you can ask me, if I don't deliver the top line, but I want to deliver the top line. Increased penetration continue to grow and delivering ROAEs even better than what we currently have. My colleague yesterday said an airplane will never fly backwards. We are not going to fly backwards. It was 15.2% in this quarter, and we expect it to increase, if we can deliver more and more, which was the case of the loan book in the past quarter, we will do it.

Next question from Daniel Vaz with Safra.

[Interpreted] Congratulations on the results and the delivery, since the beginning of the strategic plan. I think it's -- we can see how dedicated the management is in readapting the bank and improving the whole quality of the portfolio while still growing. My question is focused on Cielo. Cielo is a strategic asset of yours. You're talking about integrating Cielo, particularly in SMEs, integrating Cielo even more. It's already partially integrated. But in terms of TPV, Cielo had a big difference compared to the network. So perhaps we're thinking about those big accounts, not SMEs. This is an important difference in trajectory. So I'd like to hear from you what is the strategy for the large accounts? Perhaps there's a loss of profitability and you don't want to change that? And in SMEs, you advanced a lot also in terms of governmental programs, and that's an important liquidity for the system. But the Cielo part in terms of strategy, the strategy is not so clear to me in 2026, '27. I'd like to understand what is the integration stage we're at.

[Interpreted] Well, thank you, Daniel, for the questions. #1, regarding Cielo. Cielo has also been undergoing a process of transformation, which is rather significant. Over there, we created separate teams for the 2 partners. Today, we have a connection at different sites with the Wholesale and the Corporate Retail segments. And we worked with them in a plan and so that we'll be a lot more connected in a verticalized way. Talking about cash and talking about affiliation, more than having a segregated company, where I would originate something and they would work with it. No, they have to improve logistics. They did. They had to deliver tap-on-phone. They did, deliver. They had to deliver a whole new pricing system for D-0, they did. They needed to deliver a connection to our app. We delivered it together. So all of that is done. But you're correct. I think that there were 2 or 3 cases, I don't remember, 2 or 3 of large accounts. And the similar team went to the limit and took it to the limit and decided to give up the TPV, which was important rather than losing profitability. So we see an ability to grow and grow a lot because we are very accelerated and tractioned in SMEs, and we reduced the attrition with our distribution channels. And this is an army of more than 5,000 managers in addition to all of the digital offering that we have. So we are going to move forward. You can rest be assured of that. But we are not going to throw away money with margins that are effectively very reduced. Regarding SMEs, our SMEs, we are growing not only in government clients, our expectation is to continue to grow. With a very similar number that we had in 2025. Indeed, we haven't got that final number, okay, Daniel, the final number regarding government or total government programs. But we have an estimate. And the estimate is that we had 26% or 25% to 26% market share. We were the bank that operated the most government clients last year. We have an initial estimate, our own estimate, not market estimate, but let's wait for official data, but that's kind of that level. We have good traction, but we can only do all that because of the kind of structuring we have in the SME segment and also because of our technology deliveries, our ability to hire through our digital channels, the whole modeling of the Credit BU portfolio management. So we are not granting credit just because we have a government guarantee. We have a lot of criteria, and it's always about RAR, risk-adjusted return. We have a program to price each one of these government programs. So, we have a lot of traction. We ended the year with high traction, and we believe that we will continue to deliver good results and Marcelo?

[Interpreted] This is one of the important pillars of technology this year. We created our app for business with a totally different technology embedded to it. And this is a very important reinforcement for this. Yes, we're migrating 500,000 clients to this new experience that Cassiano just mentioned. So that's another important information. We are increasing our competitiveness with Cielo being integrated.

Next question from Yuri Fernandes with JPMorgan.

[Interpreted] I mean, your long-term view -- your long-term view, I mean, I know sometimes it's not easy to invest in the future, but you are delivering improvements gradually. So congratulations for it. I mean my question is about capital. I mean CET1 is very close to 11%. I think this quarter was 11.2%. But for 2026, there might be some challenges. There are some prudential adjustments going forward, 49.66% operating risk. So can you please elaborate a little bit about the capital outlook, whether CET1 should remain at 11%? Or maybe possibly it will be slightly lower and you would just gradually increase it. And in addition to that prudential adjustment, my other question has to do with your portfolio growth. I mean, you posted a very positive growth message. And like you said, the bank is well tractioned. But this 9.5% growth in the portfolio with retained profit, the retained profits in the middle of the guidance also might imply some capital consumption. So going back to my question, will it remain at 11% or it will go slightly above? So if you can tell me something else about CET1, I would appreciate it.

[Interpreted] Thank you. You were constantly provoking us about this topic, and I really enjoy your provocation. So thank you again for joining us today. I would like Andre to start answering your question, and then I will follow through.

[Interpreted] Thank you, Yuri. In terms of CET1 of around 11%, that's what we expect to have throughout 2026. We are here talking about loan book growing at 9.5%, and we look at full CET1 of 9.2% in the first quarter, going up vis-a-vis what it was in 2025. So interest on equity that was BRL 14.5 billion last year, it will go up this year for above BRL 15 million. Our capital absorbs that portfolio growth increase in interest on equity. And here, we also have DTA, like you said. So CET1, it's around 11%. In the first quarter of the year, we know that we have the regulatory measures, operating risk, the Resolution 4,966 issue. So everything has been computed whenever when we mentioned CET of around 11% for this year. There might be some fluctuations, but it will be around the 11% number, but our baseline is 11%. But there might be some fluctuation for the reasons already explained by Andre, but it will be around 11%, and this is important.

[Interpreted] Yuri, I would just -- I'm not going to repeat what they said because this is what we expect to see. But 2 years ago, we told you that we have a lot of discipline when it comes to capital. And every year, we review our DTA or tax credit horizon for 10 years, meaning that we are constantly monitoring that. And we also evaluate all of the opportunities as you put it yourself. Therefore, we are constantly looking at that. And back then, we said that we would have enough capital. But look at our allocation in our loan portfolios. Turnover of the wholesale bank therefore, everything we are doing is very well planned and coordinated. So I can even go further. I think we can surprise you more than anything else just in terms of our CET or common equity. And of course, net income will grow and our return as well. Obviously, [ 14.67 ] is a challenge more for some banks than others. But it is for the period of 10 years, but there is an intersection here, which is '26, '27 and '28 are the heaviest years. But after that, when the horizon may change. Therefore, we are very confident about everything we are doing and in terms of the capital that we are allocating. Well, thank you for your provocations.

Next question from [indiscernible] with Santander Bank.

[Interpreted] I would just like to revisit the payroll loan. I think you said something about it, but if you could elaborate a bit more about your appetite and expectations for payroll loans and more specifically private payroll loans? And I know that on the public side, you gained some important and relevant market share.

[Interpreted] Well, we are very, very well positioned to grow. Gain market, of course, that depends on the competition, but I think we are well positioned to gain market share. Well, we gain market share on the public side, INSS that involves a lot of market discussions and things related to the management of INSS, when it comes to payroll loans. But we are also very well positioned with INSS. But on the private side, we tend to increase our share. And as I said, we deploy models that are highly competitive 24/7. We are growing. We've seen that in the past quarter of 2025, the last quarter of last year, and we will see the same things happening throughout the year. Therefore, I'm very optimistic in terms of everything that we are doing to grow and to gain share.

[Interpreted] Next question from Renato Meloni with Autonomous.

[Interpreted] I'd like to second my colleagues and congratulate you on the deliveries, since the plan was announced. I think that the results show the whole work that was done. Over the year, you showed a lot of ROE expansion. But when we look at the guidance at the midrange, ROE similar to that of Q4. So I'd like to understand, do you expect 2026 as to be a year of accommodation of settling or the uncertainty regarding the elections made you be more conservative in the guidance? Now moving to 2027. If we have this scenario of accommodation, I think that in 2027, we bring ROEs to more reasonable levels. What would be the levers in revenue to increase profitability?

[Interpreted] Renato, thank you for the question. I'd say that I don't see a year of settling for us. I think it's part of our plan. Again, we will improve step by step because we'll continue to invest to increase competitiveness. I don't want to be repetitive, but this is our mantra. We focus on this all the time. Regarding the ROE, again, it's kind of an internal joke. Yesterday, we were laughing about this. An aircraft will not fly backwards. So there's no chance that we'll do less than 15%, 20%. Actually, Andre, you might witness and Cassiano as well, I said a year ago, I'm more optimistic. I'm more pointing to the upper range of the guidance than focusing on the lower band of the guidance. Of course, this year, I'm a little more optimistic. So what we actually saw, Renato, is that the market somehow started bringing the expectation of our net income to BRL 30 billion, BRL 31 billion. And the role of IR is to correct the course. You don't have a 30%, 40% leap year-on-year because we continue to invest in our transformation. Remember that. I see a higher and growing ROE. Indeed, you mentioned the macroeconomic aspect. It is true. We should have a little more volatility in the second half because of the elections that is only natural. But I am optimistic regarding what we are doing and our ability to compete in terms of the expectation of our economists we'll have the GDP growth and unemployment rate very balanced. So we have a lot of opportunity for growth. With the interest rate cuts, they happen a little faster. This will help some companies regarding their costs, if they are a little bit more leveraged. So of course, the macroeconomic environment does have an influence for all players in the market. But I see us with a lot of opportunities to grow the ROE. And if we can deliver superior absolute results, just like the loan book that grew 11% when in September, it was growing 9.6%, we will do it. We're not wasting time. We're not wasting space or losing space. And please remember what I explained here, Renato. We are well aligned, increasing penetration. I spoke about Principal segment, SMEs, Corporates doing well, the Insurance company. I mean, they are delivering a lot. And there are several verticals. Earlier today in the press conference, Ivan spoke about the continuity of growth in pension plans, active distribution there. So I see 2026 with optimism. I think that there is some a structural issue in Brazil. In terms of the fiscal aspect and the public debt. But if we're able to look at the public debt regardless of the presidential candidate, if we improve that for 2027, '28, we'll improve the market expectations. And he asked about the levers to increase profitability.

[Interpreted] Renato, I can say that it's almost everything, credit. We're growing it with the right drivers. But we are not operating in the higher risk segments for credit card, mid-income and high income. In lower income, our risk appetite is lower. Credit is a big driver. Liability management, the liability management we've been doing and the growth that we've been posting and we've posted a lot of growth. Fee and commission income, the main levers and the detractor. So that's another line. The insurance group again. And in the other areas, payments, our consortium business at full speed, the ability for auto loans in our own channels and external channels and so on and so forth. So I see a lot of opportunity because our organization is diversified. We have different revenue sources at different moments. And this year, we will review the channels, and this will increase cross-selling a lot. We spoke about Bradesco Expresso, distributing a lot more consortium, operations, insurance, payroll deductible loans, but also Bradesco Financiamentos selling more insurance. So we have a number of opportunities for cross-selling. Our business app that we'll have Cielo will soon have insurance, dental insurance. So it's all part of operating leverage for us.

[Interpreted] Next question from Thiago Batista with UBS.

[Interpreted] My question has to do with what you just mentioned, good performance of the insurance group. In recent years, the share of the insurance group was about 20%. It got to almost 50% in 2023, and it was dropping. But in recent quarters, it became relevant again. I think that in consolidated income, a much higher percentage came from the insurance group. This is due to an ROE of 18% post to that. But in the sister banks too a bit under pressure. So 2 topics, 1 is the relevance, when I think about the midterm in 5 years' time, how much of the results should come from the insurance group? And #2, is the power of the organization hurting the consumption of DTAs of the bank. In 2026, will DTAs start dropping or not?

[Interpreted] Thank you, Thiago. Well, the insurance group is not getting in the way in terms of consumption of DTAs, and that is important to mention. What we have been saying in terms of DTAs is that this is a year when we will try to neutralize the nominal portion. We'll see a reduction of DTAs in 2027, '28. And this is part of our plan stretching until 2028, as Marcelo mentioned. And that is super important. And I think that we've had the best allocation possible in managing the cost of capital, and it has to do with the tax credit. What was the second part of the question? Well, a comment to make periodically, the insurance group also pays dividends to the controlling shareholder. So we declare it and repay it. So you see the insurance group is a strength to us and not the other way around. It is diversified. It is the biggest insurance group in Latin America. We have a huge traction in the bank's channels to distribute insurance, but we also have external distribution of insurance, reaching out to other clients, which were not necessarily reached out by our internal channels. But we don't hope that the insurance group will do less. We want them to do more. We have an expectation of growing even more. This is what we are seeing. The bank is investing a lot. We're investing in technology, 22% in 2025 over 2024. The bank is investing in technology. And sometimes, we capture the value considering BF consortium and so on and so forth. So what I see is, over time, we should have 2/3 from the bank, 1/3 from the Insurance group. But if this means that the Insurance group will grow a lot more and have a bigger share, I'm happy. I want to deliver more. And this is our expectation. We are very pleased with the results there and with the other related companies. So you'll see that we will be taking off in our ROE and absolute profit.

[Interpreted] Next question from Matheus Guimaraes with XP.

[Interpreted] Congrats on the results. I would like to revisit the SME topic. I think Andre talked about market share, and that was a relevant information. And historically, this has been the bank's strength in SMEs. But we've seen some competitors, even new bank talking about SME. Of course, the concept of SME varies in terms of the size of the company. But what would we expect for 2026 in that portfolio? Because given that this is a very relevant portfolio for you in terms of growth and even in terms of growth going forward.

[Interpreted] Matheus, thank you for your question. We are very pleased with our position. In reinstating our position, I must say that I've been working directly with Jose. Jose is the VP in charge of that area, but I've been working with all of my colleagues, [ Alexandre Pinheiro ], Mario [indiscernible] Marcelo, the entire corporate team or company team and also wholesale bank with Bruno, et cetera, and the middle market team. First of all, we always look at what places the Central Bank in terms of assets, companies up to BRL 300 million a year because this allow us to draw a comparison. Competition in this area is very fierce. We always knew that. But our distribution strength is very important. We delivered a lot in digital channels. We hire government progress through digital channels. The journey is very efficient. And we continue to invest. If there is a place to put money, it is precisely in SME, micro and small and midsized companies. The levers continue to be government lines, but also, we provide funding to company vehicles and other investments that have even sounder guarantees, prepayments to suppliers, all of that, it's part of our journey. But then when you look at the digital need with the new Internet app, I mean, a new app when we are migrating over 500,000 clients. The retention rate has been enormous and great growth opportunity and the commercial team in the back office is supported by GenAI and new tools. We just deployed Salesforce back in 2024 for the company segment. And now we are expanding that with the entire business segment and the previous platform we had so we can manage this whole set of things much better with more than 5,000 managers in 21 points of sales. I am very, very pleased with the results. So look at the level of market share we have and see all that we were able to deliver in terms of our loan portfolio. And that was not by chance, but rather because we implemented in new tools, new segmentation, new tools to our clients, new experiences and certainly with business unit models and products that are much more suitable. With SMEs, Matheus, not only we reduce the risk, but we increase penetration, and this is what we have to do. AI is here to help us. There are things that are a lot of -- involve a lot of machine learning and other things involve Gen AI. So there are things that we do to manage our portfolio, some predictive default models and engagement to grow, this means the client life cycle of a client totally connected to our analytics via CRM, which has also been revisited. Therefore, we are sticking to our position. I mean, going from 16.6% to 17% or 16.4% that's not what changes the game. We have to continue to grow and at the same time, reaching our fair share of everything that is important to us. And I'm very much aware of our potential and the growth that we can post for either corporate and individuals.

[Interpreted] Next question from Carlos Gomez-Lopez. Now I'll turn into English.

Congratulations on your second year of -- under the new management. I had 2 very brief questions. The first one is about the absence of cockroaches, as you call them, bad corporate cases. We haven't had any this quarter? In your guidance for the next year, do you expect corporate defaults to stay where they are? Or do you incorporate some deterioration? And the second is, could you comment on what tax rate you expect for next year?

Carlos, the answer is no for the first question.

[Interpreted] But Andre, you can just start answering on the tax rate, and then I can add if necessary.

[Interpreted] Okay. The tax rate that we are working is between 16% and 21% and 18.5% or 19% to calculate fixed net income. And why is it that the tax rate was 20% in 2025, and it dropped a little bit. First of all, because we anticipate higher payment of interest on equity, like I said, BRL 14.5 billion in 2025. So I'm saying between BRL 15 billion and BRL 16 billion in 2026. Certainly, this is a number that certainly depends on interest on equity to be announced by the government. It's not a fixed number. This is just the best estimate, but we anticipate growth in IOE, so that we can take more advantage of the embedded benefit. And secondly, is what Marcelo said, part of our investments bring about competitive gains. And like consortium. We've been highlighting that almost every quarter, we could also talk about auto financing that had posted a good performance in the past 3 months. We have several examples, even with BBI. All of the companies are posting very strong performance, and this helps reduce the rate -- tax rate. That doesn't mean that this is operating weakness. But on the contrary, this is very well distributed. And this year, in particular, the tax rate will drop a bit. I mean, depending on the company, the rate is different. The insurance business has a lower tax rate. I think this is the answer. And we have no concerns when it comes to the wholesale bank. So thank you, Carlos.

Next question comes from Tito Labarta from Goldman Sachs.

You may have just answered it, but just wanted to make sure, right, because on the -- if we do ROE on a pretax basis, it's actually been a little bit more stable throughout the year, right? And I think on the guidance, our tax rate will be a little bit lower. Just because of the tax benefits you have, I think as your profitability generation improves, I would expect that tax rate to go up. And I think you mentioned the insurance tax rate is a bit lower. But just to understand, in terms of the underlying sort of earnings potential of the business, do you think that keeps improving? Or do you think this tax rate sort of remains low because of the tax benefits that you do have? Just to kind of think about excluding the tax rate, the ROE of the business and how you see that continuing to evolve?

[Interpreted] Tito. Regarding the operational results of the group, the operational results of the group before taxes grew 27% in 2025, very strong. Secondly, looking at 2026, the answer is no. Yes, we will post strong operational result growth. And it's not about a weaker operational and a lower tax rate. It is all well distributed with Insurance, very strong consortium, very strong Bradesco Financiamentos, very strong. It's a very big group with several companies. When we consolidate it all, we see a small reduction of the income tax rate. Let me stress this Tito. We spoke about this in the other question. The insurance group has a smaller tax rate. If you go to other affiliates as well, for example, in payments, it's the same thing. We consolidate it all. And sometimes in one channel, for example, the complete connection of Bradesco Financiamentos with this one single channel for checking account holders or non-checking account holders. So I have -- it's a different situation sometimes. It's not the case of the tax rate, but there are other companies that have different tax rates, which is the case of Cielo. You see there is a mix of tax rate. And you should not forget that sometimes in the end of a period, there are some fiscal aspects, a certain law here and there. For example, insurance group benefited from that in the past quarter. They benefited from one law that affected the tax rate. So this is kind of what explains it, nothing different, as Andre mentioned.

[Interpreted] Next question from Eduardo Nishio with Genial. Still no sound. Let's move on and the question comes from Andrew Geraghty from Morgan Stanley.

Congratulations on the great results. I know you have discussed at some length credit growth and some expectations for payroll loans, secured loans. I was hoping you could maybe elaborate a bit more on each of the different segments and how they fit into the loan portfolio guidance of 8.5% to 10.5%, kind of where you're expecting better growth, maybe where you're expecting some weaker growth and where there could be some upside by segment, if possible?

[Interpreted] Well, actually, as Marcelo mentioned, we start 2026 stronger than we started 2025. We had a positive surprise in credit in Q4 2025. So we start the year already with a lot of traction. So we see a continuity of that movement. So what do we see in terms of trends? Very strong SMEs followed by individuals and then wholesale, wholesale competing with the capital market funding. As Marcelo mentioned, sometimes very high tickets making a difference. In Q4, positive difference for us. That doesn't happen all the time. But I think that the expectation, the prospects for the segments would be this, SMEs, individuals, wholesale, we have traction across all fronts, and we are ready to capture all opportunities. Right, but Andrew, there are some different situations, when we speak about the affluent segment. In Principal, we have relationship products such as investments, the credit card with a value proposition that is unique for these clients, totally different experiences for these clients. The same goes for Prime, which is different than the relationship for INSS retirees. For that audience, we offer deductible loans. And when we get to Prime and Principal, mortgages. So we have these mixes of products that sustain in these segments. And this is just to mention a few major. And in terms of companies, legal entities, we have a huge mix of products growing in small and medium-sized enterprises in different lines, by the way, increasing our penetration there. And with the wholesale bank, we are recycling the portfolio, and what we call OBD book origination for distribution, which is the case when the capital market spread was very crushed, we can compromise risk-adjusted return. So we don't work looking at that. So it is better to distribute than effectively keeping it in our books. And we have a set of fees, which are also important for us, in different lines of business. And there's also cash management. It is a super important platform for small and medium-sized enterprises as well as for the wholesale, we have a new technology platform, which over the year will bring us important improvements. That is another key point to improve profitability.

[Interpreted] Let's see if Nishio is back. We still cannot hear you. Not yet. Maybe if you remove your headset, maybe it will be better. We cannot hear. We're receiving a question about mass income. Okay. Tell me a little bit about the mass income portfolio?

[Interpreted] So if you need any more information, I can add. Okay. Mass income is probably one of the major transformations of our banking cycle, since the beginning of our track record, our history. I think we are bringing some good news. I think Marcelo mentioned it quite well. 90 million clients are already fully digital in the mass retail with a totally different value proposition. But again, it's much easier to operate, not only they use BIA GenAI, but there is a specialist that can help with a customized sale, which changes the paradigm of having an individual physically present in a branch. The second relevant aspect is the engagement, our capacity to serve that client with Gen AI tools and integration tools that are very important to boost sales. And I think this has been a major evolution. We anticipate BRL 45 million. So throughout the year, we will be fully digital. This will be our mass retail bank. This is a very important aspect. And today, February 6, we already have 25 million digital clients because every week, the numbers are growing with zero resistance, zero friction with clients. And this has been a very pleasing experience, very good experience. And behind all that, all of that is supported by a very good technological platform for individuals, and this will encompass all the individuals. And I think we've been telling you about that in the past quarters, and this will certainly grow or help us decrease cost to serve, which has been significantly reduced, and this has an important correlation to our footprint adjustment.

[Interpreted] Well, [ Nishio ], thank you very much for joining us. I know you had a that problem with the sound. But thank you. We are always available to talk to you and also to welcome you here at the bank. And the same thing goes for our IR team. I think Cassiano gave you a good backdrop. Well, you saw more than BRL 40 million at the end of '26, starting with BRL 19 million, but engagement is increasing and improving. And certainly, we are able to reduce direct cost to serve by 40 fold. We are very committed to what we are doing. And there are still people that look at the physical space in the physical world, and we are testing different models all the time with our Bradesco Expresso, so that we can address these topics. And this is a challenge. In fact, I said that I went to Asia last September. And I heard comments from some banks, they have the same challenges we have when it comes to footprint adjustments, cost to serve and consumer. Therefore, an issue, we are sticking to our plan, and we will bring this year, and in particular, in the second half, more information about this digital retail. And thank you. Thank you, Nishio. And with that, we conclude the Q&A session. Questions that couldn't be answered right now will be answered by our IR team. And before I turn the floor to Marcelo to his final comments, I must say that this presentation and the full material of this release is available in our IR website.

[Interpreted] Well, thank you, Andre. Thank you, Cassiano. -- and I extend this thanks to all of our team, who helped us in this video conference. And thank you, our audience, for your interest and for the time that you spent with us. Its what I said -- I mean, this is the summary of our transformation, 8 quarters in a row, delivering good numbers with the focus that I said, without losing sight of the plan that we set up for ourselves step by step, but delivering improved ROE and improved absolute net income with a very engaged team with clients and with the Bradesco team. So thank you once again. And our team is entirely available to give you more details, not only about this earnings presentation, but also about our transformation program. Thank you all very much, and thank you for joining us.

Good morning, everyone. I am Marcelo speaking, straight from Bradesco's headquarters to present some details on the results for the third quarter of 2025. I think you've had the opportunity to read the results that were published last night. I think you had the opportunity to read it and just see a few things related to our results. So I'll start by saying that our recurring net income was BRL 6.2 billion this quarter. That means that it was up 2.3% year-on-year or was up 0.1 percentage points, posting 14.7%. So we had a very sound consistent results considering everything that we've been saying to you in the past 7 quarters. This was after our transformation plan. So basically, here, we are talking about profitability. So profitability maintains gradual growth and secure growth with operating consistency. All you have to do is look at all the lines. Revenues continue to grow in almost all lines NII and NII net of provisions, fee and commissions income, the insurance group and other related companies and the highlight goes to client NII. Delinquency rates remain under control. The restructured portfolio comes down, as you will see further on. And our secured portfolio rose quarter-on-quarter, reaching almost 60%. Operating expenses are in line with expectations and very much contained. Expenses are under control, and I will elaborate further on that topic. And we also anticipated our footprint adjustment and the numbers are higher than expected. And once again, we were able to deliver a sound performance of the insurance group with ROAE over 21%. This slide brings a bit more details. Our total revenue was BRL 30 billion, up by 13.1% year-on-year. Total net interest income almost nice -- I mean, almost 4% growth, fee income, almost 7% growth, and the insurance group grew 13% year-on-year. That shows continuous growth. So what do we attribute this growth to? I mean penetration in the customer base, I will revisit this slide further on because if we didn't have any penetration in our base for individuals and corporate with consistent improvement of customer experience in all business segments, we wouldn't be able to post constant growth in all of these revenue lines as you could see from this slide. And now moving on to our loan portfolio. Remember it was BRL 1.34 billion, again, consistent growth, 9.6% year-on-year. Now here without going into a lot of details, but further on, we will give you more specific details. So growth, both in individuals and corporate are more related to secured lines. You will also notice that the highlight is with micro and SMEs, so almost 25% growth year-on-year, and this is a very well managed portfolio with a lot of collateral because this is what will allow us to grow consistently over time. So next slide zooms into some specific credit lines because these are growth levers. So what can we tell you about this? I mean very sound commercial traction in all lines. If we didn't have a good customer base and penetration in that base, we wouldn't be able to grow this much. And the other element is the credit modeling in the business units that we created including portfolio management, which you can see in the down -- the bottom part of the slide with a lot of machine learning, improved models. We hired more than 200 people to our credit BU. We did upscaling. And what we are noticing is that there is a constant evolution in all segments, not only individuals and SMEs but also the retail bank -- I mean the wholesale bank with all of the balances that this requires. And now I would also like to highlight a few points. I mean, Bradesco's payroll loan ended the quarter with almost BRL 102 billion. Our share is approximately 14.2%. Among private banks, we are the largest one. We lost in this commercial disputes to public banks but our public portfolio 15.4% share. Social Security, first of all, was 15.4%, public, 14.3%; and private 7.5%. We were very conservative in terms of granting private loans. But then further on, we can elaborate on this. But we put together a more restrictive credit policy at the very beginning because we didn't want to run into many risks. So our policy is to work with the companies that we used to work in the past, and for the employees of these companies that were at least employed by the companies for a year. So in the first case, the level of delinquency for lack of payment was 12%. So this number is coming down. Operationally speaking, the market is oiling the wheel. So on average, I'm not referring to any specific organization. But on average, the delinquency level in this particular portfolio for these new cohorts, is around 11%. And ours, it's 3%. So we didn't grow. I mean that portfolio decreased on the private side year-on-year. And then year-to-date, as well. But then when we look at the third quarter, the Central Bank just released the numbers for this portfolio for September. And then I think you can look at that. So we are resuming growth on the private side, our policy is now a bit more open, but we are also growing on the public side. INSS with all of the changes that were done in the first half of the year went from a market production of BRL 7.5 billion to BRL 3.5 billion. And shortly, what is happening here since this was the largest portfolio among private banks, our monthly settlement is higher. If you look at the Central Bank numbers, you see that there was a drop in the INSS portfolio, and now we will start growing again, meaning that we accelerated public portfolio and the expectation is to grow next quarter and to grow next year consistently in all these lines. So security, public and private and look at our share. So we don't have anything to lose. We always have to gain more. So this is the outlook. And credit cards, if you look at the numbers, we grew substantially in the high income line. In terms of real estate, our share is about 20%. There are 3 or 4 banks whose market share is slightly higher. But in the last quarter, I mean this entire year, in general, we preserved margins. Now we see opportunities with also some modifications to accelerate real estate again. And rural portfolio, the portfolio of the bank loan grew 25% very collateralized or secured. SMEs, we are growing consistently quarter-on-quarter and year-on-year, almost 25% year-on-year and when we released the plan we anticipate that we would struggle to remain in that leadership position. I'm talking about companies that have revenue or banks that have revenues up to BRL 200 million a year, and we gained share with SMEs as well. This is just to say that we will continue to grow. We will continue to grow our loan portfolio. And as a reminder, last year, we had a write-off of the restructured portfolio of almost BRL 10 billion and large corporate growth. And large corporate, we didn't have that growth. And if everything were to remain stable, if there were no write-offs and if large corporate portfolio had not declined, our loan portfolio would have grown even more. So we are well positioned. We have the desired clients. We have demand, and we will continue to grow and we expect to gain market share in payroll loans. We will continue to grow real estate, SMEs because we gained market share. So we are -- we have a very good commercial traction and as a consequence our total NII grew almost 17% and the total NII net of provision grew 14.4% year-on-year. But when we look at client NII, we grew 19%. But when we talk about client NII net of provisions when you are balancing that portfolio with cost of risk, we grew 18% reaching almost BRL 10 billion. And the expectation is continue to grow. Now speaking about expenses with LLP and we just had a press conference with journalists and they asked about this. BRL 500 million of variation on the cost of credit quarter-on-quarter. There are 2 cases that justify this. First, there is a one-off case in our wholesale bank because we made provisions I mean, obviously, I cannot give out names. But if you look at the full publication and look at the provision phase, you will see that we have cost of credit for mass retail and wholesale. But when you look at wholesale banking, it's about BRL 200 million every quarter or BRL 300 million. So they're certainly regular and this one goes from BRL 200 to BRL 500 approximately. So it was a one-off case. However, we could also grant credit in the middle which is also part of the wholesale banking. But once you offer certain facilities, you also have to call provisions beforehand. So this is natural seasonality. But if we were to exclude that and also what was added to the John Deere Bank, this would be perfect. So the coverage level that we did for them put us on a -- still in a very comfortable position. This was a one-off case. And so we decided to make the necessary provisions and just move on because we want to continue to grow. And given that, that is flat, the average cost is 3.2% rather than 3.3%. Therefore, no worries here because our portfolio is very good. This slide, after long conversations with Cassiano, he's already here. And Andre likes to say, okay, this slide or this screen only comes with good news. I see a lot of good news here. But I would also like to comment on a particular issue because I got a question about it. If you look at this numbers down below, it goes from -- it goes down from 7.9% to 7.7% and Stage 1 growth and that is the portfolio with better quality. And this takes us to the restructured portfolio. There is a drop of almost BRL 10 billion year-on-year, which is quite significant because if you go back to the early months of 2024 above BRL 12 billion. And even the loan portfolio improved. Look at what happened, the number is dropping in terms of our total portfolio. And another positive number is the level of secured portfolio. Almost 60% was the number that we reached. Therefore, we are doing a lot of things to come up with this kind of performance. Delinquency is flat. There is a footnote here that says that -- I mean, over 90, there is a slight deviation, and this was also related to the John Deere Bank. But I don't see any issue here because they have other ways to finance their equipment in agribusiness companies. And this affects because we consolidate all the numbers. But if you look at the portfolio, it's absolutely under control, and this will certainly help us make things go forward and generate more revenue. Now fee and commission income, if we do not have commercial traction, if we cannot deliver a better experience to our customers and good and adequate relationship, we could never post a good fee income that grew almost 7% and the highlight comes from credit cards, almost 14%. And consortium management, we grew 22.1% year-on-year. But this product comes from customers at different levels, I mean, mostly corporate customers. Our rates are about 15% of the Selic rate. So it's very attractive. Asset management. I mean with these levels of growth, [indiscernible] is a highlight. It reached BRL 1 trillion of assets under management. And if you look on the right side, I will draw your attention to loan operations. I mean we are still traction. And I'll draw your attention to our investment banking. Investment banking shows a drop of 29.9% because the baseline of the previous quarter was a growth of 75%. Therefore, if we look at year-to-date this year, it is growing 24.1%. And this is not de buying work because this involves growth in new teams, engaged teams. Certainly, also this involves pipeline generation coming from all different segments of the banks like wholesale, middle market in addition to custody and brokerage services, which also posted growth year-on-year. Now operating expenses. Before coming to that, I would like to mention an adjustment to our footprint. We are moving even beyond what was anticipated for our footprint. This year, it was [ 1,269 points ]. And a year ago, in 12 months, 1,600 points. That means that we move forward, which is quite positive. And we are doing that, thanks to the talent of our team with a lot of intelligence backing it up, and this will be an ongoing trend. And when we talk about the guidance then for 2026, we will tell you what is our expectation for next year. Expenses are growing 9.6%. But also look that somebody asked me about that. Personnel expenses and admin expenses grew 5.5% year-on-year. If we were to eliminate the effect of variable -- higher variable compensation, our growth will be 2.5%. Our expenses are absolutely under control, and I would like to draw your attention to one item. Without EloPar and Cielo, it would be 8.5% rather than 9.6%. But let me give you some additional information. And this is also posted in our full publication. I think you can find that on Page 21, that's when we talk about operating expenses. But so looking at operating expenses, this is where we consolidate everything. Admin expenses year-to-date and year-on-year posted negative growth, meaning that there was a decrease. But if you had the chance -- have the chance to look every single line, you will see that some expenses grow and some other decrease like transportation decreases. But there is a line that refers to technology. That technology line, if it didn't have any quarterly variation, we would decrease admin expenses in the quarter. But also this quarter, absolute growth was BRL 140 million. I would like to draw your attention to one particular figure. So when we look at our balance sheet, we consolidate all of the associated companies. So when I take [ Elo and Alelo ], the growth of admin expenses is higher than 20%. So here, it goes up BRL 140 million. I can tell you that a good part of that comes from these 2 companies because they affect us due to the equivalent. So expenses here are pretty much under control. Now personnel expenses. Cielo had no impact in the quarter when it comes to admin expenses. But then when I move to personnel expenses, Cielo posted growth of about 7% -- slightly over 7% in terms of personnel expenses. But if I am to exclude variable compensation and I look at fixed compensation, which appears in the first line of operating expenses, you will also notice that personnel expenses would fall to a number probably below 3% if we were not doing that equivalent with Cielo. Therefore, you have to take a snapshot and just think that we have consolidations that were also posted in the numbers. So I can certainly say to you that our expenses are very much under control. Certainly, there was a higher impact in this result. This is, in our view, a positive expense. And there is another factor here because you have to adjust all your provisions when you have the collective bargaining agreement, which was higher than 100%. So it's very hard to index these personnel expenses. So we see expenses absolutely under control going forward, right? So now the insurance group, as I had mentioned in the first slide, the net income is consistent. We continue to bring very good profitability when we look at year-to-date at 11.4% year-on-year, 6.5% growth with an ROE above 21%, as I mentioned with you. And I attract your attention to the operating results that guarantee the consistence of the insurance group's earnings with the total earnings growing at this level, year-on-year 13% operating results, 10.2%; financial 18.3%. So that's very consistent growth for the insurance group. And this is also not divine intervention. All of the customer segments and pretty much all lines have been growing, delivering positive variations year-on-year, but not only here in our customer segment, but also in all distribution channels that the insurance group has for the brokers, digital channels and I pointed at that now in our press conference. And the technical provisions reached a level of BRL 435 billion with growth of 10.5%. Now moving towards the end of the presentation. Our capital, even with the growth of the loan portfolio Common equity grows 30 bps to 11.4% and CET1 grows 0.4 percentage points, as you could see. Now our guidance, I talk a little bit about this literally. If you look at that, we should move in the year when we closed the quarter to fall within the guidance, but at the higher interval in all items, including expenses. So considering everything that I told you about. So look, the loan portfolio, for example, from 4% to 8%, we're growing at 9.6%. So if you go there to our earnings presentation of the fourth quarter of '24, you see that we grew the portfolio quite well, BRL 981 billion. If you look at the portfolio, that's BRL 1.034 billion today and you put BRL 16 billion of growth, the baseline takes us to BRL 7.1 billion. So I'd say that we will grow between 7% and 8%, a little bit more maybe but with consistent growth in here. Also NII net of provisions in the upper levels of the interval and so on for each one of the items. All of them laying or falling in the higher end of our guidance. So we'll deliver the guidance at the end of this quarter. Now quick overview of our transformation process. We will have a more detailed view when we close the year. But we have been evolving very well in all of the aspects of individuals in each one of the segments. Bradesco Principal closed September with 41 offices and expanding still growing, and I'll talk more about that. I talked about the footprint exceeding expectations. We launched global solutions and enable the platform to 100% of wholesale clients for our cash management. We have more than 11,000 people working with enterprise agility in our organization and also advancing quite quickly. And with everything we've been doing in IT and the intensive use of GenAI, our productivity in terms of development grew this year 109%. Looking forward, for the next quarter into the next year as well. What we have here, I'll point 4 topics without getting into the details of each one of the items of our Mandala. But first, Principal. We should close the year with 300,000 clients, approximately 62 offices in almost 40 cities in Brazil. And Prime has been evolving from its value proposition. We will already have 3 million customers, maybe slightly more than that. We have more than 14 million customers that are fully digital who no longer use physical point of service. They're also being supported by our Bradesco Expresso which grew and has more than 39,000 bank correspondents throughout Brazil in every city of Brazil and more than 5,600 municipalities in Brazil. In SMEs, we saw traction that we have. Last quarter, I talked about the new app. We've expanded the app for small and micro companies. They can hire loans from Pronampe e Procredit directly on the app. It's a new very streamlined experience. And obviously, all of our segmentation process has been proving effective with growing penetration in this segment. And I would also like to point here at the bottom about our culture. So Bradesco or IM Bradesco. Last year, we showed that we had the survey with 74% of participants with high engagement levels. This year, we had 84% of all of our employees being engaged and answering a survey showing the evolution that we have in this aspect as well as all the other initiatives that we have in all of these different areas. Two pieces of information to conclude my presentation and to move on to the Q&A. I've been talking a lot about Gen AI. And now I said, well, I'm not going to talk about this anymore. I keep talking about this in all firms that I go to and here on the earnings presentation. So let's get BIA to talk to you. And I had a surprise when they brought me the video because they had an avatar that is the last time you're going to see this, okay? Next quarter, I will bring a new one that will be a lot nicer than the one that's going to talk to you right now. It's about a minute long. It's a very brief video. So let's have a look at it, and I'll come back for the conclusion. So please.

Digital transformation through enterprise agility and the massive leverage of Gen AI is generating impressive results. Look at this. I can highlight 4 fronts of progress to you. First is the increase in productivity, hyperpersonalization, risk management and customer engagement and journey. We've already reached a productivity increase of 109% this year, and we built a new income model with a drastic reduction of 95% in the time to create an expressive increase in accuracy. At the same time, we increased security with sophisticated biometrics, and we offer hyper-personalized experience. And customer service has full engagement with 90% retention rate on BIA's chat and innovations such as fixed by voice. Here, Bradesco Gen AI goes beyond technology. It is a part of our transformation at the service of our customers and our business. So that's it. Thank you very much. Now it's back to you on the studio real life Marcelo.

That's a tough one, right? The next one will not be this avatar. We're going to have another one. So I'll head to my conclusions here, restating what I said at the beginning of the presentation about our commitment to increase profitability. We are getting close to the return on cost of equity. But step by step, as we said since the beginning of our plan, revenues is the main driver of profitability, increased expenses under control, credit portfolio with a balanced growth, always prioritizing risk-adjusted return. Risk appetite that I said at the end of last year remains moderate. But the delinquency rates, portfolios, vintages are completely under control. So we have a lot of traction in the brand bank, change the bank, and we're confident that we will have a good quarter at the end of this year, and we will also have good quarters next year, 2026. So now I invite you for the Q&A with my colleagues, Cassiano Scarpelli, CFO; and our colleague, Andre Carvalho, IR Director. So Andre, over to you. Thank you.

Thank you, Marcelo, Cassiano. It's a pleasure to be here with you. Good morning, everyone. I'd like to remind you that our CEO of the insurance group, Ivan Gontijo is participating remotely. [Operator Instructions] First question Daniel Vaz. Daniel, please go ahead.

Thank you, Andre. Good morning, Noronha, Cassiano, everyone so I'd like to talk a little bit about cost and this overview of the footprint that you accelerated a lot over the last 2 years -- so closing a lot more service points that were expected, both in 2024 and '25. I think you accelerated even beyond those targets. So my doubt is about 2026.. hould we expect the same pace of closing? Or is the trend going to change focus to reap operating efficiency to move towards that goal of 40%, down from 48% when you were announcing the strategic plan? And then a second question still on costs. You mentioned Elo and Alelo growing 20% year-on-year, even more so in costs. So we can imagine that this is the level that will be maintained going forward. Is there any one-off situation that would cause you to accelerate cost in these 2 companies?

So I'll start with your second question. Thank you, Daniel. What I have to say is they do not grow in personnel expenses. So it was on the other way around. I only mentioned that to say we have different dynamics. But they have been growing in terms of volume, revenue, earnings, and they have been investing. So naturally, when you increase customer base, you also increase cost of processing and this type of cost, it's natural to see an increase. The expectation is that it will grow indefinitely at a level of 20%. I don't see that. But they are doing well. They're balanced. They're bringing returns. But when you show the transformation plan, what I mentioned was that we have a plan to reach that level of efficiency that's very important, and we're pursuing that and having a very strong control of expenses with a fine-tuned execution and a lot of discipline, Daniel. But now if I tell you that I have an opportunity to spend BRL 1 billion to make BRL 2 billion, we will not flinch. We'll not hesitate to move forward and make adjustments because life is dynamic. So the opportunities came up, and that's how we do it. That's not what we expect. We expect to have very well-controlled expenses. But once you consolidate, you may look and see, but shouldn't it be going down or you may see a deviation here and there. But as for the footprint, we talk about 1.6 if we review in the last 12 months, the expectation going forward, if you look at 12 months, would be to a smaller adjustment, Daniel. We're closing this number according to our transformation plan, but it should be below 1,000. That's the expectation for the next year

So just to add to what Marcelo said, once we anticipated the footprint adjustment. Of course, we have more provisions for labor, and that shows up in our OpEx line. When we actually reduce the footprint adjustment, we should see a slowdown of the labor provisions, and that should be clear from now on. I would also like to add to Daniel, we can't have to remember investments that's there for the depreciation, strong investments we've been making naturally in technology for the bank overall as a whole and depreciation on the side. So there's a little bit of that. In theory, they are offenders, but actually, they are what boosts the new level of efficiency at the bank. Of course, also competitiveness, right, Cassiano, what we're saying, and we have a more conservative guidance at the end of last year, but we will make it a point to make any investments required in terms of competitiveness. So thank you, Daniel.

Moving on to the next question. Pedro Leduc Itau BBA.

The first, I think you've already answered actually in this high level of labor provisions that we see this year is like building inventory that may be normalized next year. So I think this is already clear. That was a big offender of the results. But the other question would be in the credit quality. We see a slight increase in over 90 NPL for individuals. So I'd like to get some explanation about this a little bit, maybe the John Deere side, if that's been done or if there's more to come on provisions and also SME NPL, that's quite curious. It's been going down. So congratulations, but I would also like to understand this a little bit more, maybe the relevance of government lines going up. If you can give us an order of magnitude, if it's 10%, 20%, 30% of the SME portfolios, how is the performance of these government lines as they come out of the grace period and if there's any major concentration that we should look at. And at the end, what I'm trying to understand is if this increase in the cost of risk that we saw in this quarter is a trend going forward or not?

Thank you, Pedro. Good questions. So thank you. It's a pleasure to see you. So first, so individuals, delinquency, it was driven by John Deere. So we don't see any other issues. Our portfolio is very safe and good vintages, and you will see a good quarter on the fourth quarter in this aspect. Now for the wholesale bank, that's the case that we had. So going back actually to John Deere that you asked. Look, the capillarity is a lot greater and have smaller or larger funding depending on the size of the deal and the agribusiness side. So it's natural. It's not breaking with any history of what we've seen, and there's recovery that comes over time. That's what we saw there. So that affected a little bit because of the consolidation, but it doesn't keep us up at night, and it doesn't discourage us. With the John Deere business and our growth in agribusiness, both in the wholesale bank and directly at the retail companies and individuals as well. We are excited with this industry. Of course, we're very cautious. We've been working with collateral always here in this type of line. We do not have any deviation in our portfolio for rural credit. About the wholesale bank now, that provision that I mentioned, there's irregularity there in a specific case, one-off that was a little bit outside of the market rationale because the market is there. So we decided to provision for that with a good coverage ratio now. I don't see any other issues here. So I see the cost of risk being very well balanced. If you were to remove that case of the wholesale bank and the deviation that we had from John Deere, it would have been flat, Leduc, it would be flat. So the order of magnitude for you about this case, I can't give you the specific number, but it's around BRL 200 million more or less, BRL 200 million that we had. So we are very comfortable with our portfolio. As for SMEs, why did it go down? Obviously, we have numerator denominator here that we are warming up well, but we're growing well with collateral. So we chose modalities in FGI/FGO. Remember that I said we had a share of around 18%. We were #2 last year. At the closing, I said that at the beginning of this year. And I said that this year, we would be a leader and with more than 20% market share, and that was what led us to grow with quality because the models take into consideration those intervals so that there may be occasionally a break with those thresholds that are accepted by FGI/FGO. So we are doing very well, delivering very good quality, creating a huge culture of cost of risk in our company segments and our business of the companies of up to BRL 50 million a year in revenue. So the portfolio is under control with no hiccups. Of course, wholesale bank, there may be here and there something different. But it is worth noting or remembering what I said in the presentation, is corporate. That's the middle segment that starts at BRL 50 million and goes geographically. It's a larger extension up to BRL 1 billion. And there, depending on the expected loss or the modality we operate, you have a little bit more provision upfront because of the expected loss. It doesn't mean that delinquency didn't see the movement of Stage 3. No, because it's there on Stage 1, it's good, but you have that expected loss for that type of target you're working on. But always with that risk-adjusted returns, and that goes for everything for SMEs, for the wholesale bank for vehicles and everything for all of them.

Next question from Mario Pierry with Bank of America. The floor is yours.

Congrats on the results. I have 2 questions as well. My first question, is mainly a provocation. You're saying that credit cohorts are performing well. NPL is under control. But at the same time, we are expecting a decrease in credit. I would just like to understand why you were so cautious about credit because if you anticipate that things are performing well, why are you making that move? The second question has to do with your market margin and the increase in the Selic rate. How do you expect NII performing once you expect Selic rates to go down?

I would like -- I'll ask Cassiano to start answering your question, and then I will talk about that acceleration.

Good morning, Okay. Market NII, we did some very important work. I think it's the first time we acknowledge this year an important work done from our treasury and the balance. I think we still maintain that BRL 1 billion of soft margin. And I think we refer to that in previous occasions. So we do acknowledge that work, and we understand that this will be globalized until the end of the year, making up that a total of BRL 1 billion. Well, certainly, with a lower rate next year, we should see an improvement. And so right now, we are looking at the budget, and we may bring you some news next year. But certainly, this is a good possibility of an improvement in the market NII for next year. Well, thank you, Mario, for your question and your provocation.

[Interpreted] We should have a positive outlook in 2026. But starting in the second quarter, I mean, going forward after the second quarter of 2026 in terms of ALM, but as Cassiano said, the other lines are performing well. To your point about deceleration, I would say that it has changed. If you look at the Central Bank's relief, I think it was released yesterday and we were looking at it, I talked about the private payroll loan. Private payroll loans, there was a drop year-to-date. We also experienced a decrease year-over-year. Now we are -- it's beginning to go out and we -- it's picking up. And we will just follow the market growth. So that doesn't mean that we are decelerating in the country. And in the other portfolios, public and INSS. INSS portfolio is still dropping, but it's picking up again. And the public portfolio, traction is good. We are growing. We will gain market share -- the other one, we are doing well with SMEs. We are not decelerating, but of course, that you have to deliver the right line to the right clients. The same thing the market dynamics, I mean, I'm referring to Central Bank data. I'm not releasing any privileged information. But if you look at orders, in a year, we would grow slightly below market growth. But in the quarter, we surpassed the market growth. So that means that we have a good risk appetite. I may even be, let's say -- let's say I am bringing credit with a little bit more risk. But the important thing is NII net of provision. So you have risk-adjusted return that is adequate perfect. Therefore, I can tell you that we will be fighting for this market, and we will continue to grow. I am not pessimistic. We are cautious because we don't want to venture into like lines that have higher risk, no we don't want to do. So I want good clients, with good rating, control expected losses in segments that eventually may bring this slightly lower margin, but at the end, it gives us sustainable assets. That's why we have a sound portfolio. I mean the restructured portfolio is good. So your provocation -- to your provocation, my answer is yes. We are cautious, but we are stepping on the accelerator, whatever we see opportunities for penetration. I mean we grew 25%. I mean we grew more than the financial system. So our appetite remains sound. If we did not have, I mean, any drop in the large corporate portfolio, we would have grown more than 10% year-on-year.

[Interpreted] Next question comes from Thiago Batista with UBS.

[Interpreted] I have 2 questions. My first question, going back to the strategic plan. I mean, you released that in 2024, that has been almost 1.5 years ago. And back then, you talked about 3 or 4 KPIs. One was something about 2 and 2.5 efficiency over 200 bps. And then you talked about cost of equity. So some time has passed. But can you tell me that considering your initial diagnostics, how do you see the market? More challenging, less challenging cost of capital, cost of equity, are you going to deliver numbers very close to what was anticipated? I mean cost of capital and ROE, I think you addressed that efficiency maybe you didn't get there yet. So what is more challenging and what is more comfortable related to your strategic plan. When you talked about real estate, looking at Bradesco today, the bank has about BRL 112 billion in mortgage, BRL 120 billion of savings and LCI. So do you see any possibility of issuing more LCI after the transition? So how do you see this change in funding of real estate mortgage?

[Interpreted] I will start with your second question about mortgage loan. I mean our portfolio has over BRL 140 billion once you also add the corporate side. But the change was positive. It's an opportunity because it makes sense. It makes sense to reduce the savings, the reserve requirement of the savings account. We had preserved margin, as I mentioned during my presentation. That's why we stepped on the brakes a little bit. But on the other hand, we have the demand capacity to resume growth, and we will resume growth. This will be more noticeable by the end of the year because we have enough capacity to grow more. I also think this is positive for the system because there are 4 incumbent banks that have higher protagonist, but when we look at the regulation, it comes with some complexities. I know that you're familiar with it. But starting in 2027, what we have to look at in terms of the release of the reserve requirement in this new regulation is that there might be a decoupling in the long run because you remove that 15% of free resource. So in that vote, they say that every year, this will be reviewed. So certainly, there might be some degree of flexibility that will allow us to make adjustments. Otherwise, there will be no appetite or maybe the incentives will be -- will go in the opposite direction. We have an appetite to do it. And this makes more loyal customers because they are more profitable, of course, we have a lot to do. The higher interest rates also challenges mortgage loans. So that's the first thing. Second thing, I think that here in terms of challenges and then I want Cassiano and Andre to add to my comments. First of all, you said, are we -- we are getting there, right, in terms of cost of capital. That was a challenge. And when we presented the plan on February 8, 2024, we were talking about 13% to 13.5% cost of capital. I think if I'm not mistaken, that was the number, meaning we would have gone beyond that. That was a challenge. But it's -- we are getting very close to it, so it will come. I'm not promising anything, but it is right ahead of us. This is the first thing. The second thing, growing customer base. We cleaned up inactive savings account holders because it makes more sense to include nonactive customers, and we don't want to bring nonperforming clients. Therefore, we are working and paying attention to that. We are looking at the profile of clients, clients that are more digital and so on. So there are challenges. And but this applies to the entire country when it comes to the massive clients, which are struggling to make ends meet. But our growth level at Bradesco principal, I didn't even refer to NPS to you. But probably in our next earnings release presentation, we will talk about the growth of the individuals portfolio and bring some more information. We are seeing a lot of good things happening with our principal segment, [ Prime ], SMEs, wholesale banking, I think obviously, there is also structural growth because the GDP is not growing and unemployment is low. So this interest rate level squeezes small and midsized companies, and that's why we try to be -- to operate on secured lines. Maybe going forward, we will see more opportunities to deliver some KPIs that we will certainly bring it to you when the right time comes. Sorry Thiago, I think I called you [ Eugene ].

[Interpreted] Thiago, I would add 2 things. One thing that probably looked like ancillary, but we have the engagement of our team. I am Bradesco. This is part of our culture. Marcelo showed that 84% of our people answered the survey. And this is important because they are very much engaged in the bank's transformation. This at first seem challenging, but I think this was one of our positive surprises. Obviously, the macro environment was based on that strategic plan. That was a totally different plan. We didn't have high interest rates. The GDP was growing, the cost of capital was good. But despite all of that, we continue to invest. And an important part of that, that we have to mention in addition to people is technology. We invested in technology, reskilling, the different tribes, the concept of restructuring our infrastructure, the upskilling of the team as a whole and the intensive use of Gen AI that led to greater productivity together with other like footprint in this new growth levels. Of course, this also involves higher efficiency, 800 bps. We would get closer to 50, 52. So the plan -- it's a 4-year plan. We are heading towards the year 2. So there are lots of challenges, but we are on the right track. And in our next earnings release, we will talk more about the share. We are growing in the areas where we trust we can increase penetration. SME is a clear example. And you might recall that I said that we wouldn't let go of our leadership position, and we are doing so. And we are delivering better results on and on. But we have a challenge to increase efficiency, as Cassiano said. And capital requirement is something that is a constant here because year-end of 2026, there will be new requirements related to operating risk and other elements. I think the number is 30 additional bps for required capital. So capital need is something that is very peculiar to our industry.

[Interpreted] Next question Yuri Fernandes JPMorgan.

[Interpreted] Thank you Andre. Thank you, Andre. Thiago always asks good questions.

[Interpreted] We will call you Thiago.

[Interpreted] No, you call me Thiago UBS.

[Interpreted] You should have a sign. We saw a sign that you were on the line, and then I got confused I apologize. Thiago again.

[Interpreted] I would like to talk about client NII. It's one of the good surprises of the year, improvement in funding or something in spread, we've been seeing your line very well with this 9% that you presented now. So I'd like to take your view of NIM. So do you believe this 9% NIM is going to go up? Or is it more going to remain stable? If it's going to improve, what do you think will make your NIM improve? That's the second question, inspired by Thiago. I know it's hard to talk about medium- to long-term ROE, but I think that the market believes that Bradesco will start generating returns above cost of equity. And we see there's some expectation that this is going to improve, as Cassiano said, this is a reality in the quarter, we understand, as you said, that there have been corporate cases that played kind of against it, but ROE only improved 10 bps quarter-on-quarter, and that's kind of timid. But when we look at the detail, the insurance companies who brought most of the improvement. The bank's ROE goes down quarter-on-quarter. So again, going back to Thiago's question, what could we expect in terms of the agility of this ROE improvement? It's clear that it will continue to grow, but I'd like to understand from you, if you can, if you're comfortable bringing more medium or very long-term numbers to understand how you see the improvement in profitability for the coming quarters.

[Interpreted] Andre, you can begin and I'll conclude.

[Interpreted] So I'll start with the ROE question. Actually, what we see this year is that the revenues have been surprising every quarter with the commercial traction, proximity to customers. And that has been allowing us not only to maintain the decision of the beginning of the year of preserving investments, but also to accelerate the footprint adjustment and strengthen the balance sheet. We saw in the third quarter, the increase not only on LLP, but also the labor provisions with a clear effort to strengthen the balance sheet on one-off measures. And we were able to do that because the revenues were coming in very strongly. So here, we delivered the step-by-step the improvement in profitability in the quarter, but we decided to advance and we are having a very accelerated transformation plan. So I think that gives us more confident on the medium and long term that we'll be able to go further in this process. So the idea here for ROE improvement, we've been saying today, it basically depends on revenue basically. And from now on, it's going to be the efficiency ratio that's going to be our focus, a combination of revenue moving now and expenses still very much under control that leads the efficiency ratio to drop 10 percentage points in the next 3 years, '26, '27 and '28. So I think that's the main ROE driver that's still not priced, but it's one of the very important aspects for us to highlight in this discussion. Now on NIM, our NIM got to 9% now in September. We were promising this 9% for December. So we were able to deliver slightly early. And we are still expecting 9% in December, some stability in the fourth quarter. That's the base scenario. And we have some variables that help us going forward in this NIM. For example, the cost of funding, the funding margin are still improving a little bit, not only due to the -- not so much due to the quick wins we saw in '25, but to cash management measures of funding and things that start to mature with time. Marcelo pointed at Global Solutions. We have other measures here in cash that help -- other measures that help NIM. For example, the restructured portfolio going down. Once we reduce the restructured portfolio, in particular, the problem assets in our loan portfolio, we increased the share that yield interest, and that also improves our NIM. And as Marcelo said, whenever we have the opportunity with a good RER, we will go after it. We will accelerate, and that ends up helping us in our profitability, and then it would be net NIM.

[Interpreted] Yuri, I'll be bold here. I think Andre gave you a good overview about this spread. So I'll dare in telling you is that NII is tractioned. NIM for this quarter, I have no expectation of variations. Well, now next year, depending on our mix, we are still discussing in the light of the plan and the budget and how tractioned we are, we may even surprise you. I would not rule it out. I'm not making any promises, but I would not rule it out. And when you talk about the ROE in the medium to the long term, of course, here, we're seeking to deliver ROE and the cost of equity and then take another step. But when we had the diagnosis, what did we see? Brazil, depending on its positioning, we are an organization just like others, other conglomerates here with about 80,000 employees, capillarity with a specific model of a universal bank, there are others with a different business model. So here in Brazil, we have a market that offers long-term ROE between 15% to 20%, depending on your position. And we see that in the long-term horizon, depending on the position of each organization. It's not only, Bradesco, but the market. And I think that we have such a large market that there's plenty of room for you to have a set of organizations as we always had in Brazil, dividing a share in different customer and business segments. Thank you Yuri for your questions.

[Interpreted] Next question from Henrique Navarro, Santander.

[Interpreted] Congratulation on the earnings. 2 questions. The first about the corporate specific cases. We know that due to the secrecy and the protection, we cannot comment. But if you can give us some color within whatever is possible, this BRL 354 million, is it 1, 2, 3 specific cases? The largest one we imagine. How much does it represent of this whole? And was it 100% provisioned? The idea is to understand what would have been a clean balance sheet, so to speak, even though losing is part of the credit business, but what would have been a clean balance sheet? And also to understand if there's anything remaining in terms of provisioning for those specific corporate cases for the fourth quarter? That's my first question. The second, on the guidance, you're running above the top of the guidance in many items, very good. But why not review it now in the third quarter? Because that would give us some light to have a better idea of the number for '25 and imagine what we'll see in '26, especially in insurance that you're running well above the top of the guidance.

[Interpreted] Thank you, Navarro. It's a pleasure to see you. About that specific case that we have in corporate, we provisioned significantly. We have no expectation of additional provisioning for this case going forward for the next quarter, that's the answer I have to you. And that case is what gets a bigger deviation in our situation. There are smaller cases, specific cases as well as the growth of the corporate portfolio that, as I said, the middle market in here. So we do not expect to have any other provisions for that. And in terms of the guidance review, since we're seeing that we will fall within the guidance, the guidance is an interval. We see ourselves in the upper band of the guidance, but pretty much for all of those items. I mentioned loan portfolio between 7% and 8%, maybe slightly closer to 7%, but all of the others within the upper band of the upper range of the guidance. That's why we decided not to review it because we will soon start to talk about the guidance for 2026. I don't know if you want to add.

[Interpreted] No, that's exactly it. That's perfect.

[Interpreted] Next question, Gustavo Schroden from Citi.

[Interpreted] Congratulations for the results since the presentation of the strategic plan. I have 2 questions. And the first question is related to capital and tax credit. Maybe the question should be addressed to Cassiano. I mean there was an evolution of 11.4%. There is also the issue of profits. But looking at the explanatory notes, I think that it seemed to me that there were some changes in the tax credits. I would just like to understand if part of this capital improvement comes from the reversal of deferred or DTA of deferred tax credit. And what is the bank's policy in terms of these assets, whether you have a plan to accelerate this going forward? The second question for Marcelo. It's been a while since we talked about Cielo -- and Marcelo talked about expenses of Elopar and Cielo. I remember that when you were presenting the strategic plan, Cielo and especially SMEs also, that was a very important part of the plan. So could you give us an update about Cielo's strategic plan, particularly after the capital reorganization, I mean, restructuring. So can you tell us something about Cielo's strategic position?

[Interpreted] Nice to see you. Well, you're very familiar with our policy and as part of our assumption to make better allocation of capital in our company. So this is a relevant aspect related to this change in the additional capital, also including tax losses that you saw in that explanatory note. Even though our tax credit increased, there was an improvement in some lines. We reduced the tax losses and the tax credit from LLP had a traditional increase. So this mix of things is what led to this positive effect in the capital numbers as a whole. Certainly, we are working towards further reductions. We are very -- we know that there should be differences in the tax credit because of everything we are doing. And I think this is part of the virtuous cycle going forward. In this particular case of this quarter, it has to do with this change between tax credit from LLP, DTAs, and this should have a lower effect once you draw an average. That's why we had a specific difference.

[Interpreted] Adding to the answer, I would like to say that our common equity that was 18.4% come December, I think it should be around the same level. So by the end of next year, should be closer to 11%, which is where we would like to keep this optimization process at.

[Interpreted] So Gustavo, speaking about Cielo, well, we will refer to the balance next quarter, as I said before, about individuals and share. But there is a whole set of initiatives in Cielo to gain competitiveness. And we've been working with specific teams in both banks and together with Banco do Brasil, both on the wholesale side and SMEs, meaning that we have teams working together with the Cielo teams. There are several initiatives that contemplates customer experience in the bank's channel. There was a significant improvement in logistics when it comes to delivering equipment and also adding new solutions to companies. We've also noticed the expansion of newcomers, which is much more fluid now. And this has to do with our commercial teams and Cielo's teams. I will give you more information about it later on in other events, there is a time line because this week, I was just reading or revisiting our time line because there is a plan that we monitor very frequently. We look at our growth rates. And we will also tell you about other initiatives of the bank next time we meet. But we continue to work on our transformation plan. And now we are very much connected more so than in other occasions. We are working together. And not only that, we are delivering renewed experience to customers with a higher competitive experience, everything integrated in the SME app.

[Interpreted] Next question from Bernardo Guttmann with XP.

[Interpreted] Congrats on the bank's results. My question is about private payroll loan and your appetite. You said that you were very conservative on the onset of private NII, but now you're resuming growth and delinquency or NPL is way below the market. So what allowed you to do that? Can we say that the bank already has a scalable risk model for this new type of payroll loan, now private?

[Interpreted] The answer is yes. Our process is working like clockwork. So we have good risk appetite, mainly due to the approval. So you go to a more open market and everything has to be in place because you approve credit for companies and for employees at that company. So you should be certain that everything will be approved. And the appetite has increased. We changed policies. We are now increasing the pace. As I said before, we were declining year-to-date and year-on-year. Now the numbers are increasing. And certainly, this quarter, there will be an acceleration, particularly in terms of private payroll loans. And this is a great opportunity for those who are so important in this market, but we will accelerate both INSS and public portfolios. So in terms of payroll loan, we will show good growth going forward. And it is yet to be seen what will -- what impact this will have in the budget. But everything we're doing, we are doing with modeling and intelligence. And this is crucial if we want to succeed in this business, but we were not very certain in terms of the processes in the past. There are some deliveries like data privy. There are some deliveries that were postponed and some others will only be delivered in 2026. But that's not a problem because this doesn't change our appetite. On the contrary, things will be better going forward. But we see major growth opportunities we will grow, and we will gain share. I'm talking about everything, not only I'm talking about INSS, public and private portfolios.

[Interpreted] Next question from Renato Meloni, Autonomous.

[Interpreted] I have 2 questions. First, about the individuals mass retail, you've been growing a lot in the high income as a right strategy for this year. But I'd like to understand whether growing again and gaining relevance in the mass retail will be a relevant part of the strategy looking for the coming years. And what indicators are you expecting to be comfortable again to take risk and grow on that segment? And the second question, just a follow-up about what you said about SMEs. I'd like to understand if you see any limit being reached in the lines that were authorized with government and whether you think you could continue to grow at the same pace that you presented in the last quarters.

[Interpreted] So about the individuals mass retail, we have more than 14 million customers that are mostly or almost fully digital. And what are the challenges here? It is to have a very well adjusted models because the cost of risk here is a lot higher, Renato. We know that. And we are investing, testing and making things happen. But we've been working with this level of engagement in the customers' life cycle, doing that NBO, the next best offer in the different segments. That goes to high income. It's valid for both high income and this more digital segment as well. And we have been testing the channels with different alternatives and different value propositions within our physical world as well because you have clusters that would be a lot more connected to the segment due to the level of profitability they have to offer, but they still have the need for physical in-person service. And we've been testing all of that with our Bradesco Expresso. So when you talk about a country with the size of Brazil, it's not trivial to think that everyone will adhere to fully digital. We have a lot of social levels and different profiles, different personas in this group of people. And we've been working with all of them to be able to have the best cost to serve and the ability to continue growing with this public. But now with the proper adequate safety because here, it's smaller income levels and there's a certain degree of frailty that's natural, so to be able to provide certain lines of credit. But we've been learning again a few lessons that we knew in the past and that we brought to a model with a lot more intelligence behind it. So everything about machine learning, Gen AI, all of that to support what is managed and what is not management that is mostly digital is being used here with a lot of talent by our teams. So we will continue to evolve. And at the right time, we will bring more elements about the mass retail segment. For SMEs, there may be a limitation of lines that will be determined for next year. I think we've been having a good year. I said that in another question that we had, both with FGI and FGO, we are tractioned. We are doing well, but there may be more limitations of the lines. But this is -- we have to wait naturally for each one of these programs to be convinced. I can only answer -- I mean, I cannot tell you if it will be or won't be yet. Thank you, Renato, for your questions.

The next question comes from Carlos Gomez-Lopez from HSBC.

Hello, Andre. So I had like everybody else 2 questions. The first one is about funding that we haven't talked about. And in particular, we saw a big decline in demand deposits and saving deposits. Is that, in your opinion, related to the reduction in footprint? And what do you think your current market share is in those 2 lines in demand deposits and in saving deposits? And second, on insurance, again, you continue to deliver very, very good results. And I'm going to ask once more about the sustainability of the results, specifically in health insurance, where your earnings are now twice the level that you had last year.

[interpreted] Thank you, Carlos. Andre you can start on subject of deposits right.

[interpreted] So I'll start talking about the deposits we've been acting here very significantly this year to optimize the customers' resources. And one of the measures was to reduce our LCR that was in the past at around 190%. We brought it down to 150%. The minimum regulatory requirement is 100%. So we still have a lot of room to move, but we let go of expensive resources, especially in wholesale. And that does lead to a reduction of funding, but that was a decision -- a strategic decision we made to continue to reduce our cost of funding to improve the funding margin and to optimize the customers' resources. Looking forward, I believe we have these cash management initiatives that translate into 2 important platforms. One, for financial solutions for SMEs and another for wholesale companies that we call Global Solutions. And both of them are measures that can greatly improve the payment experience. They can also improve our performance in funding and become a structuring favorable measure for our funding margin that starts to have an impact in 2026, and this impact will probably increase in the following years. So funding starting next year, counting on the cash management measures to help us.

[Interpreted] I would just like to add a little bit, if I may, Carlos, thank you for your question, about the footprint, whether it has a relation with maybe the impact on demand deposits and savings, we believe it does not because most of customers are mostly digital. 14 million are already working remotely, and we see that we continue to work and look at principality both on demand deposits and savings, there was no drop in terms of the footprint reduction, quite the opposite. We see more opportunities working on the NBO for those customers to bring the best offer for the low-, medium- and high-income customers. So somehow, the footprint has this relationship to bring a reduction in those points that you mentioned Carlos.

[Interpreted] And there's another question about insurance, right? Ivan is with us, I believe, is online. Ivan, do you want to answer that part of the question that he asked about the sustainability of those results of the insurance group.

[Interpreted] Thank you Marcelo. So in terms of the sustainability of the results of the insurance group, we see looking retrospectively, we will find in the last 3 quarters consistently and in a linear way, we see growth not only in our operations, but also in our results. So there's no oscillation, no variation even up or down. And that makes us comfortable to look prospectively also under a very positive light. On the last quarter, we had growth in health of 9%. In this last quarter, we also saw growth in life insurance close to 10%. And the pension plans with all of its challenges also grow, especially VGBL and portability of VGBL as well as the products that we created, adding the risk or the premium, and that has been making a lot of difference for our growth. Now in the business line and real estate and equipment, we grew close to 15%. And that makes us confident as well to look forward and say that we should continue or maintain the same level of growth, reaching the top of the guidance that we committed to at the beginning of the year. Now in terms of the health insurance, the underwriting discipline, checking the improvement of the clients, we increased about 75,000 net lives this quarter. And in October, we already see the same growth level and the same base that we've been addressing in the recent periods. Regional products developed specifically for the region from the health company also gives us comfort in terms of the growth, considering that our product is a product that all Brazilians want to have, both for themselves and their families. The growth was mostly in operational lines. And obviously, the posture, the stance adopted to fight abuse or fraud makes us confident for this claims ratio that the Bradesco Saúde and the health care insurance group has reached this quarter. These are my comments. Thank you, Carlos, for your question.

[Interpreted] Thank you, Ivan. And that's well noted. Bradesco Saúde, it's a premium insurance.

[Interpreted] Next question from Nishio with Genial.

[Interpreted] My question is about the credit cycle, more focus on SMEs and individuals. I would like to hear your comments on these 2 lines. We saw very good performance of SME, both in terms of NPL and growth, like one helps the other. That's the effect. So the question is whether you still see room for further improvement of SME delinquency. And also looking on the individual segment, looking at your peers, despite the improvement, your NPL is still higher when compared to your peers. But the question is whether you see room for improvement? And at what phase of this cleaning up you find yourselves and whether you think you're already going towards -- heading towards growth. I mean the cycle of '21 impacted both SMEs and individuals. So did you clean up the portfolio? Are you ready to grow more? Or you still feel that there is more room for improved delinquency further?

[Interpreted] Thank you, Nishio. So first of all, over night, it was 4.1% in September. The base scenario is 4.1% in December. Slight deviations, I mean, about these numbers is natural, but the basic scenario shows stability of our NPL in aggregate terms. SME, Marcelo, is insisting on that point. First of all, we were very cautious to concentrate our business in the secured portfolio, discount of receivables, rural credit with guarantees or collateral. So the new cohorts are showing good performance. And this is what is bringing NPL down. It could fall a little bit more, but the base scenario is for a certain stability given the economic stability that we anticipate going forward. So I think this is an important aspect. When it comes to restructured portfolio, as Marcelo indicated, in 12 months, the troublesome part of it was down by almost BRL 12 billion. And that was an important cleanup, but it's still possible to proceed with the derisking of our credit group.

[Interpreted] Nishio, thank you for your questions. I would just like to add to what Andre said. I still see SME as a line that will post a decrease in NPL. Everything is under control. But if I look at individuals, if I look at a further horizon going towards 2026, it depends on the mix that you have. I said that in the year, the market grew more than in vehicles. But in the quarter, we grew more than the market. But if you draw the mix, you may even have a higher NPL. But eventually, I'm not saying it's there. But if you change the mix, like the auto, and you grow more than payroll loan, for instance, right? So then in this case, you could strike a balance in 2026. But always, return will be adjusted to risk. It will be a risk-adjusted return. So I don't see any problems with delinquency or NPL, but I see some decline with the SME portfolio still this quarter.

[Interpreted] Next question comes from Tito Labarta from Goldman Sachs.

My question, you talked a little bit about our growth and you're growing in some segments where you feel more comfort, particularly more the secured lines and the other segments you're not growing, but you may increase your risk appetite going forward. Marcelo, if we go back after you became CEO, part of your strategic plan was to potentially increase market share in loans from the 14% to maybe 15% to 19%. Since then, your market share is still relatively stable. Just thinking -- how important do you think it will be to increase your market share in order to keep improving profitability? Or should the focus be more maybe focused on the segments that are more profitable where your overall market share maybe matters less? Just how should we think about your ability to gain market share from here and how important that will be for you to improve your profitability going forward?

[Interpreted] [ Marcelo ], you start and then I'll follow.

[Interpreted] When we announced that mission of increasing market share by 14% in that range of 15% to 19%, that was February last year. That involved a 5-year plan, right? And in these 5 years, we have to take into account the economic landscape. Back then, interest rates were down. And what came next was an increase in the Selic rate to 15%. And now we are seeing the deceleration of the Brazilian economy as a consequence of this monetary squeeze. So considering the economic landscape now is appropriate to keep your risk appetite under control. I mean the financial situation of companies and families will improve with time. So naturally, the risk appetite of banks and companies will get better. And then if that happens, we can look for better market share. At the time, we are very cautious. But as Marcelo was saying, our approach is very segmented. When we see that there is opportunity to gain market share, we will certainly go after it. I mean, high RER because what we want is to increase our share. So in all the lines that we see opportunities, we will certainly grow market share. I mean, short time is not the main goal. The main goal is to increase profitability consistently.

[Interpreted] I would just like to add something else, Tito. Thank you for your question. Looking ahead, our mission remains the one of gaining share in that interval that I showed you in the plan, right. But what do I see in a shorter period of time? We had good growth. If we didn't have -- as I said during my presentation, if we didn't have an issue in the large corporate portfolio, we would have come down over 10% year-on-year, but where do we have more traction? I mean, payroll loan of individuals. It accounts for approximately 15% of our total portfolio, and we will gain share right there. Mortgage loan, you may have one or another bank that will get a little bit market share, but we will also gain share here in mortgage loans. I mean, on both sides. I mean corporate side, individuals, also keeping a significant amount of that because I think we have close to 20% of share. Now auto, we see opportunities there, too. Obviously, if you look at the whole picture, there are some different areas. And you have new vehicles. When you look at individuals, you have people with more appetite than we have to go after these clients. And the same thing goes for corporate. But looking at rural clients with some -- we do have good relationships and a good appetite to do the same thing with individuals and entities. On corporate side, there are different categories. These lines of FGI and FGO, we performed well so far this year. We still see that we have enough room to gain more share. I can even say that we are gaining share with SMEs as I was showing you during my presentation. So there is room for us to grow in SMEs this working capital on the business side as well, rural the same heavy and passenger vehicles, the same thing. So all of these lines are priority lines, and they are a good focus for us. The idea is that at the end of 2028, we will be in that interval that we presented when we introduced our transformation plan. But we're doing everything with the right choices, adequate risk appetite, portfolio management and growing in areas that can be traction and penetrated most of it through digital and the physical world. And we will just go forward because the idea is to gain more share with risk-adjusted return. Again, I insist on that point. I was saying that we were growing above market in the quarter, but always with risk-adjusted returns.

[Interpreted] We now conclude the Q&A session. The questions that could not be answered at this time, our IR team will then answer your questions after the presentation. And before I turn the floor over to Marcelo for his final remarks, I would like to say that this presentation is available in the entire material related to this earnings release presentation is available in our IR website.

[Interpreted] First of all, I would like to thank you very much, Andre, Cassiano and all my colleagues that are always here with us in our studio. I would like to thank the entire team of Bradesco, all of our employees and the ones that are constantly engaged every day, looking at customer engagement, looking at everything that happens in the bank, including the insurance company, consortia, the consumer finance area of the bank. And most of all, I'd like to thank you, sell-side analysts. You are always interested in participating in this event. So we have an IR team very much engaged and ready to talk to you about the results and the outlook and the buy side guys as well, clients that are with us at this time as well. So again, thank you very much. And I reinstate the trust we have in everything we're doing. I do apologize again for that avatar because we were asking [ Ferbia ] to do something and then they put my avatar. But I promise that next time, I won't have that avatar again. But let's move on. We are certain that next quarter, we will certainly deliver great numbers. Thank you all, and have a very nice week. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

Good morning, everyone. I am Marcelo Noronha. I'm speaking directly from the headquarters of Bradesco at Cidade de Deus to present our earnings results referring to the second quarter of 2025. We are speaking live. It is now 10:31 a.m. in Brazil. Thank you very much to all of you for joining us in another earnings conference call. Almost straight to the point to what matters. We disclosed yesterday our earnings. We reached a recurring net income of BRL 6.1 billion, posting a significant 28.6% growth year-over-year with an ROAE 14.6%, plus up 3.2 percentage points year-on-year. So what is the summary of our earnings in this quarter? Firstly, we believe that our operating results showed consistency in all of the line items particularly in the top line -- in the main revenue streams and I mention NII net of provisions, fee and commission income, especially fees and another good quarterly result of the Insurance group. Operating expenses are under control. The loan book is absolutely under control over 90-day NPLs indicated, over 15-day NPL, all under control, Stage 3 as well as I will be showing you momentarily. So the organization has a lot of traction and matching the plan that we presented in February of last year. So we have changed the bank and run the bank very well connected with a lot of intersections between the 2, a lot of deliveries and the use of Gen AI to help us gain productivity and efficiency across the organization. So this is the summary. And based on that, we are delivering consistent results in our view. Here, our attempt is to present cause and effect because net income, the operating result is the result of all of the seeds that have been planted and everything that is being done in the organization. So here, we have total revenue of BRL 34 billion, up 15.1% year-on-year and in the quarter, up 5.2% quarter-on-quarter. Here, we have the bar chart showing the level of revenue growing. Of course, the first quarter is always less accelerated in our industry, but we can see coherent perennial growth. And since we presented our plan, we said that we were going to do things step-by-step with consistency. Total net interest income growing a lot in the quarter and year-on-year. Fee and commission income above 10% increase year-on-year and more than 5% quarter-on-quarter. Insurance, pension plans and saving bonds growing 6.5% quarter-on-quarter, 21.7% year-on-year. And this is the effect of our activities, very strong activities across the organization and related companies. Now speaking about the expanded loan book. So it leads to the financial revenue, of which I will speak momentarily. Our portfolio reached BRL 1.018 trillion, growing 1.3% quarter-on-quarter and 11.3% year-on-year. And here, we can see 3 main points. In large corporates, we're not growing for 2 reasons. We normally say that in large corporates, we can grow BRL 10 billion in 1 quarter and in the next settle the same amount. We had some settlement due to the IOF in May and June. And another phenomenon is that we've been using our origination for distribution, OPD. Where we have the ventures in the capital markets, we carry part of it for the secondary market later and to improve adjusted return. And if we look at all of the line items, we are growing practically all of them in the quarter, and we're growing significantly in the year, mainly in Individuals, micro and SMEs. We are growing in lines which are backed by collaterals. So we have here the growth in total revenue. I spoke about large corporates, and the big highlight Individuals, growing almost 16% into year-over-year. Again, important growth in more -- in safer collateralized portfolios with good ratings. Micro, small and medium-sized enterprises, a big highlight here, growing 25.2%. At the end of the present, I will again speak about cost and effect. The effect of this growth is that it results in NII, fee income. And all of this is the result of all of the decisions made INSS our change and run the bank, in of the segments. Individuals and enterprises and companies. And I'll speak about this later on, but let me give you a preview. If we leave behind the segmentation and targeting of each bank, if we look at the segmentation by the Central Bank of Brazil. SMEs, for them, our companies making up to BRL 300 million a year. All banks have to inform this regardless of how they call the segments. And we see that Bradesco is a leading bank -- is a leader, and we have been growing our assets in this segment of companies earning or making up to BRL 300 million a year. So moving on, we see here the traction of credit, resulting in growth of net interest income, growing almost 16% year-on-year, 4.7% up quarter-on-quarter, with credit provisions growing NII net of provisions, BRL 9.9 billion. And here, I will explain the numbers. I can tell you that we are quite flat here. We integrated John Deere Bank in Q1. And of course, our rural loans have the highest expected loss in the month of May. In June, this is already dropping. So we have a cost here which is slightly higher because of that. If we were not having this consolidation, our cost of risk would be between 3% and 3.1%. Since we've been growing large companies, we have a denominator effect. So I can tell you that we have expenses with LLP are flat. Market NII BRL 300 million, we were expecting it to be 0 or negative, given the pressure of interest rates of almost 15% on ALM. And this is not happening by chance. It's happening because of the level of activity we have in our customers desk combined with loan production, loan origination in the wholesale bank. And all of that results in trading positions and with our new energy desk that also creates revenues. ALM, trading energy operating really well and bringing us the results. And when we look at client NII, growing almost BRL 18 billion, 8.8% spread, a nominal growth superior to the growth that we saw in Q1, BRL 1 billion here and also growing consistently. And more importantly, client NII net of provisions growing 20.7% year-on-year, BRL 9.6 billion. That's really important to us. And the result combined with market NII. And this is important because it has an effect on the bottom line. NII net of provisions, almost BRL 10 billion, 19.4% year-on-year, growing in the quarter as well, but with consistency and balance in several line items and work fronts. Credit quality over 90-day NPL quite balanced and flat. And here, there's a note of 15 to 90 is no longer the indicator. And so 15- to 90-day NPL also flat and representation or share by stage, Stage 3 growing, growing more than 10 basis points in the last quarter at 7.9%. Stage 2 is slightly higher here. It doesn't mean it's a bad portfolio, it's classification by expected loss and consolidated mix with John Deere influenced that indicator. If it weren't for that, this indicator would be flat as well. Important data. Restructured portfolio is dropping. Last year, we reduced by BRL 4.5 billion in this portfolio. If we look at our not cured portfolio, in this year alone, we can see there was a reduction of 5.4 basis points, reaching a total of BRL 30 billion. And here, we see the evolution of the secured portfolio reaching 58.5%, up from 57%. So origination is growing a lot more in secured loans vis-a-vis unsecured portfolio. Fee and commission income, again, speaking about constant effect. Fee and commission income grows because of activity. And we show here with a highlight BRL 10.3 billion growing 10.6% year-on-year, 5.5% quarter-on-quarter. And 3 highlights here in this quarter. Card income, almost 20% growth year-on-year and especially in high income and not in the other markets, open market poses a greater risk, BRL 4.5 billion in the quarter, 3.3% quarter-on-quarter. And also consortium management another strong quarter, almost 21% growth year-on-year, and we regained leadership in movable assets. And our investment banking capital markets surprising with this number. We had strong M&A activity, #1 position on M&A ranking. But what draws my attention is this growth, almost 34% growth year-on-year and almost 76% growth quarter-on-quarter. And this is the result of our activities, a well-balanced pipeline, our team, I'll speak about this in the end of the presentation, good origination and good activity considering wholesale bank, retail bank, treasury, everything gave us traction and led to even more gains in these activities. We are very confident of our investment banking and global markets activities. Operating expenses reached BRL 15.9 billion, this year-over-year growth and quarter-on-quarter growth. Now let's zoom in our operating expenses. When we break it down, personnel and administrative, we see the growth was 4.9%. If you look at the complete earnings, you will see that administrative expenses have a negative growth, and that's the result of several actions to gain efficiency. And these will continue along 2026, '27, '28. One of them is the adjustment in our footprint compared with June 2024, we are talking about more than 1,500 service points reduced until now. And personnel growth is linked to greater result, profit sharing, variable compensation. Even with these adjustments, we grew our client base by more than 1 million. And when we look at an indicator that I showed you in the last 2 quarter calls, all of our payment companies, EloPar, Livelo, Cielo, all of them have been making important investments. Cielo has been going through a strong transformation with good investments. OpEx and CapEx, excluding this in our comparison base, when we look at all operating expenses directly under our control, our year-over-year growth was 5.8%. In other words, expenses are controlled despite our robust transformation plan. We're hiring a lot of technology people, people working with data, and also in our Credit BU, so regardless of the adjustment in our footprint. Individuals group posting another strong quarter with this level of net income, BRL 2.3 billion, 4.4% up year-on-year and ROAE of almost 22%. That's another highlight. So robust revenues and the results of Insurance operations and that's included in our guidance. And we can see that the result is primarily operational, 31.1% growth year-over-year in all line items. Although the Insurance group is very much down to earth in their provisions, they have very balanced provisions, but we see growth in the level of activity. And this is a result of management. This is the result of commercialization through our internal channels, selling to all client segments in the organization and all external channels that work with Insurance group, resulting in technical provisions that are robust BRL 425 billion in the quarter, growing 11.2% year-on-year, 2.6% quarter-on-quarter. So now let's talk about our capital. We continue to see a lot of consistency. As we've announced, we've been talking about this since late last year that we would have stable capital. So Tier 1 is 13% now going up common equity to 11.1%, although we've paid out all the dividend as the market knows. Now looking at our guidance, most -- all of the indicators now converge to our guidance because of a few facts. First, the economy in the second half of the year tends to be slower. The demand will be slower in the second half of the year because we are now at the peak in terms of interest rate. We have heard comments by the National Monetary Council telling us the economic activity is stronger but slower than the last quarter. That is we see a slower. It doesn't mean we will stop growing what is good. We want to continue to grow in everything that is good. Next to our baseline. If you look at the Insurance group, we had very strong numbers in Q3 and Q4 2024. So that's a higher baseline. If you look at the expanded loan portfolio, the same thing happened in the last year we had a strong growth. But now closing the year 2025, we will converge towards the guidance. As you've seen, we made 2 changes because these 2 indicators had more traction. So they could grow higher. Fee and commission income up to 5% to 9% and Insurance from 6% to 10% now from 9% to 13%. These were the adjustments we made. Now let me give you a brief summary of our initiatives, change the bank and run the bank, both coordinated and connected to show you that we have a lot of traction. We had great deliveries. So this is a summary. I will also make a few comments about technology. We had a reduction in the lead time. We've improved productivity. I also want to talk about our wholesale bank and SMEs. And tell you that in this quarter, we've expanded the number of Bradesco Principal offices. We have 7 new offices now. We have been working on our culture and our cultural evolution with So Bradesco and training the team, and we continue to hire employees. These were colleagues that were outsourced and they are now our employees. And we're also hiring from the market so that we will have our own team of employees working in tech. So let me break down a few of these line items to provide more qualitative information to you. First, let me go back here to talk about Gen AI again and how much it means to our organization and also where we stand. So here, we have 3 blocks to try and make it easier to understand. We had a debate with the Brazilian Federation of Banks, and there was a lot of talk about Gen AI. And I also talked about this with you in previous presentation, speaking about some of our initiatives. In the first block, we are looking at technology efficiency. So now we have IT closer to the business. Last year, we've implemented the enterprise agents. So now they're fully operational, and we've expanded that quite quickly and together with IT and technology and also credit recovery and collections. They worked together and using a lot of Gen AI, building scripts with clients. Every day, we're making changes, making modifications to these scripts depending on the level of success. Also, we have 2 multi-agent projects. It is important to say that we had a test. We worked with 2 large consulting companies to include multi-agent projects and large legacy systems. One of them is in COBOL language on the mainframe. Now we went on to the second stage, and we're now beginning the third stage of this project. These 2 legacy systems will be delivered in the cloud using new technology by year-end using multi-agents or virtual squads combined with squads including human colleagues. And that will be done also in other projects. We've been using Gen AI also in the chat with customers, more than 5 million customers are already using. And here, you can see a combination of indicators to show how much our productivity has improved. So making a comparison between 2024 and 2025, we've had an improvement of 58% in terms of efficiency. Looking at productivity gain in virtual squads using multi-agent AI plus other technology, some important tools that we are using. Now with Copilot supporting our developers, our product developers and storytellers, we've improved our productivity all in all by 94%. I mean if you look at our capacity, I mean, we are gaining productivity but not because we want to reduce cost. No, because we want to optimize our resources and deliver more, remove legacy systems to deliver a better experience and have more efficiency in our processes. And different teams in different departments, including legal. So if I look at December 2023 and compared to now, our delivery capacity is 3x greater. And this efficiency gains, so now we have a lower cost per application, and we will see that in the bottom line, but also providing a better experience to customers, more productivity, higher personalization, using a lot of intelligence behind the relationship with customers and proprietary tools to gain productivity. I told you about our developers. I also spoke about BIA tech in the meeting at Febraban and also here talking to you. This tool supports our developers, our squads, bringing 58% more efficiency. And the environment is fully organized and prepared for the developers working in our squads. And via BIA GenAI and the new BIA will not be available for 100% of our customers. Compared to the first BIA, the first BIA was based on a different technology. This one now has 50% more accuracy. It's really impressive the Bradesco artificial intelligence, our BIA. And let me also speak about Bridge. Bridge is a technology to help us use Gen AI, and we have more than 200 initiatives across the board in the organization using Bridge, Bradesco intelligence of generative data (sic) [ Bradesco Generative Data Intelligence ], so you know what the acronym stands for. And in terms of education and technological development, we are now using new technology, new technological processes. We acquired 100% of Kunumi, we've already announced. And here, we have very specific deliveries in credit, in portfolio management using multi-agent squads to develop our models. So these are really important deliverables developed by approximately 100 employees who hold a PhD, who are true experts. We already have an institute with 12 labs plus 15 in final negotiation because our goal is to have one lab in each state of Brazil in time, so that we will spread our tech culture through our Tech Academy providing training. We now have the Copilot [ Premium A5 ] to 100% of our associates logged here in the bank, including our trainee personnel. So some using that for development and using Gen AI to learn about that so that we have our true tech culture because the final result is higher productivity, as I've mentioned. Now I have 3 more slides. To conclude my presentation, we have been using machine learning and AI to support customer management and the applications used by individual customers and companies. That's why I have 2 slides to speak about our company customers. So large companies and SMEs. We have a high penetration rate in all segments. Our wholesale bank is now even more sophisticated. We have 6 business segments. All of these segments in addition to the investment bank and global markets operating in Brazil and abroad. And with this segmentation, I mean, we need critical mass. But if we have expert service because here, we have further segmentation by industry, by geography. So it is a high level of operating complexity, but it helps us be closer to customers. So we have a stronger team now especially in corporate, but also in agribusiness corporate and global corporate as well. So we have a stronger team also in the investment bank, both for variable income and fixed assets. And in global market, we also have a stronger team. And the result was that we had improved numbers coming from the investment bank because we have much more origination capacity with a stronger team. Our distribution is also stronger and very much connected to wealth management now. We've delivered global solutions, and it's a very interesting solution for cash, for large companies. We have our new energy trading desk in treasury, working with the wholesale bank, and that has led new income streams for us. That's why I'm always talking about cost and effects. First, you set up the energy trading desk and that begins to generate results and income for the bank. In corporate here, we added 10 platforms. You remember, we launched the agribusiness segment. It is now fully operational this year. So the wholesale bank, we are doing our homework, and we are very active generating lots of fees and commissions and business for treasury desks. Now in the retail business, looking at SMEs, we have companies up to BRL 50 million a year, between BRL 3 million and BRL 50 million a year, then small business up to BRL 3 million a year and the micro businesses, which is also part of this segment. And we have platforms in the main regions of Brazil where we have agricultural activities also to support customers in this segment and individuals as well. Now let us talk a bit more about companies and businesses. So we have a new digital platform with great deliveries in these segments. As I mentioned, this is the largest segment in our retail bank. As you know, we've delivered 150 branches in 2024, and we can see a significant growth, a new value proposition for these clients, improving the level of service in these branches. Now in terms of small business, we now have a new segmentation. So because here, we have -- I mean, these businesses, they are spread geographically. So we need an account officer to manage these accounts and the micro business or MEI offering digital support and also human support backed by Gen AI. All of this, we -- I mean, we were -- we had enough traction to deliver all of this because we now have a very different time to market. So we can provide a new experience for clients. They can open accounts using the app. We launched this new service for companies in March and then we expanded in April and in May. So we are now able to provide this new experience to very small businesses. MEI, 90% of the customers have already migrated to the new application and they are active using the app 7-10 times a week. Now in August, we have 50,000 new very small businesses or micro businesses joining the app. So we provide a higher level of services, solutions for collections, payments and loans using Pronampe, Procred government programs, and they can use self-service using the app, but also with human support if needed. And this is the digital transformation. We have a reduced time to market, more functionalities using multidisciplinary squads backed by Gen AI, again, focusing on the best customer experience. And the integration, I mean, I spoke about our app. It has been delivered for Android. We now have a new version for iOS launched now in August. We are one of the very few organizations that have the app for both systems for Android and iOS. And we are using APIs to have a full integration. So we are ready for banking as a service. We even have the integration with BIX, agility and corporate account openings and Cielo integration. Cielo had a great first quarter. But looking at our customer base with Cielo, we've gained share in the first quarter because of all these things we've implemented and the integration by APIs. So this is the information I have. Now we come to the conclusion. This is a summary of my presentation. As I said earlier on, we can see -- I mean, our team can see that we have been able to deliver consistent operating results, a very consistent balance sheet, growing more than our net income. The operating result is growing above 30% year-over-year. And we feel very certain our delinquency is under control. We can answer questions if you would like to have more information about that, but we believe delinquency will continue under control so that we can continue to grow. We know the market will grow slower. So we have to make the most of all opportunities we have, knowing that the bank is -- has a lot of traction in running the bank, changing the bank in all the segments of customers. So this is the information I prepared for you. Thank you very much for joining us. And let me now sit here with Andre Carvalho, our Investor Relations Officer and Scarpelli.

Thank you, Marcelo and Cassiano. Good morning, everyone. I'd like to let you know that Ivan Gontijo, CEO of the Insurance Group is joining us from offline. Questions can be sent in Portuguese or English. You can send your questions via email to [email protected] using a WhatsApp channel (11) 97443-8238 or just scanning the QR code that is on your screen. First question from Thiago Batista.

Congratulations on the results. I think you have strong points in the top line. That is a positive highlight. My question is regarding the positioning of the bank regarding low income segment or mass market. When we look at that sector, it is perhaps the only one operating well below the cost of capital of the bank. Looking at the midterm, do you think that this segment will be able to be profitable even if it's served by the branches you need to implement a more structural change to provide more digital service? And how digital next will be positioned? How will they be used in this segment?

Thank you for joining us for the question. And the answer is yes. This is what we believe in, and we have working -- have been working strongly in the mass market with the transformation of the bank. And I mean digital mass market. We have some million clients being served remotely and having different experiences with high personalization. And eventually, we will be talking more about that. Net should be close to this Digital that was a completely separate operation. Well, not yet. They continue on their own track, and we'll speak about that strategy when the time comes. But yes, that segment can be profitable. A super important channel for these clients for service and for client acquisition is called Bradesco Expresso. As I mentioned in the past, we have been trying different models, models [indiscernible]. Remember that we only have variable costs. We have about 39,000 banking correspondents across Brazil. And we had a relationship platform, B2B2C. Now we have a B2C. And now we have -- we offer a much better experience connected to CRM and the intelligence behind the offering for the clients offered by the banking correspondents. And all the transactions are done with the merchants and with a very high penetration in our acquiring business so that these merchants can offer clients alternatives services and products. So this is a strategic important channel. And in due time, we will give you detailed information of everything we are doing on that channel. But we are convinced that we are accelerating and that we will get to very different levels with us combinations reviewing the footprint, reducing some points of service, growing in principal, growing in corporate, growing in SMEs, growing in businesses and in banking correspondence as well. And it is this balance that we will be showing you in due time, Thiago. But we are very excited with everything that we're doing at the bank.

Second question from Daniel Vaz with Safra.

Congrats on the results. I'd like to explore two points about your presentation, Marcelo. You mentioned signs of the slowdown in economic activity and demand. And looking at the Business segment, there's a new segmentation. So exploring this segment, SMEs making up to BRL 3 million in revenue per year. Could you elaborate on the slowdown of economic activity in this segment? It would be reasonable to think that these SMEs would be the first impacted by this economic slowdown. And I'd like to understand the opportunities you're seeing in this segment to understand this new segmentation. What will be the position of Cielo because we have seen some campaigns geared to this segment by Cielo. So I'd like to hear about Cielo's risk and opportunities.

Thank you for the kind words, and thank you for joining us. Here's what I can tell you in this segment up to 3 million barrel a year. And you know about the level of mortality and risk of these companies across Brazil. We have another segment that we call MEI, the micro enterprises. And there are a large number of companies spread all over Brazil that have been in the market for many, many years, and they are really small. And they present a slightly lower risk, but we see an opportunity to manage these clients because they bring us interesting profitability. They still require contact and service by a human. They use a lot of the digital channels. We talked about the app that we delivered. But what have we been doing? I mean this does not apply only to small business. This applies to individuals, legal entities of different sizes in the middle market. The work that we are doing with the credit BU to which we implemented many new models and also portfolio management permanently monitoring and kind of with an early identification of possible losses in some sectors, in some companies, in some ratings. So all of this gives us a different complexity level in our modeling. We have credit policies adjusted by the modeling periodically and all the time. And so we have this ability to execute that we didn't use to have. And all this credit monitoring with solar signs automated by machine learning models. It's all connected to the segment, and we've been doing this very success. So we have the Enterprise segment, and this is happening in the business segment. And also, we are choosing the modalities in which we want to operate. We are operating with a mode of secured loans, programs by the government, FGO, FGI of government programs in this half year produced almost the volume that we originated throughout last year for companies. And that's positive for the companies because they have long-term credit with lower spreads, more time to pay. But we have to have the right and well-oiled models so that we can accept the range of losses here the spread is lower, but risk-adjusted return is different. So we're operating with government programs with highly liquid receivables such as card receivables and other receivables wholesale. So we have been prioritizing those modalities that bring us lower margin, but that bring us long-term relationship and service for these companies. So we are seeing core opportunities for growth. We believe that in any economy that will grow in the future, we'll have small businesses growing more than other segments as usual. So we have a 15% interest rate in Brazil. But we are looking at a time horizon of 2028, 2029, and 2030. And we're going to have these small businesses having a greater share in the financial business. And to answer the last part of your question about Cielo, we created a connection via APIs targeted services. We have been increasing the penetration rate and our share mainly in the last few quarters when we delivered in-house solutions and solutions via Cielo. So we see us growing with good combinations and offering better and better services to our clients, micro enterprises, businesses, enterprises, middle market, corporate up to BRL 300 million and also for large corporates. Thank you, Daniel. One final point Daniel. Very candidly, and I'm speaking about this now, and I spoke about this in the press conference. We are very confident about the quality of our loan book. We are not taking risks here. Andre and his whole team have a clear guidance regarding our risk appetite. My colleagues heading each segment are very well aware, and we are very confident about 2025 in terms of our loan book in all segments, individuals and legal entities.

Now Pedro Leduc from Itau BBA.

Congratulations on the deliveries. You're making solid steps when you speak about step by step. Now two brief questions. One, as I look at operating expenses, 2/3 of the increase came from the line named other. When you look at administrative and that cost, that is under control. But when you look at the line other, then you see the increase. So have there been adjustments and when you look at personnel and administrative, you already have a higher level of efficiency. So next year, other will also be under control. I mean it drew my attention that this line item other has all the expense increase. So this was my first question. The second question, we've seen you reviewed a few indicators in the guidance, services and insurance. But when we look at the NII net of provisions, if we compare that to the midpoint of the guidance, it seems like the loan loss provision will remain the same in the second half of the year. Is that right? Or I mean, you did not change the guidance because the high range is already including some growth -- so I'd like to hear more on why you kept this guidance equal.

Well, thank you. Thank you for participating. It's a pleasure to see you. I think that maybe Andre could begin.

Cassiano, alright. Yes, well, it already includes the loan loss provision. We had a large number now compared to what we want to have in the future. And also, you have gains from the reductions we made. When you look at personnel and administrative, yes, we already had the adjustment. So I believe we have an interconnection there. But yes, this line item other is helping us accommodate to make the changes we have in the change the bank initiative. But -- and then when you look at personnel and administrative, it has already been optimized.

Andre?

[Interpreted] Yes. Let me add that operating expense, as Marcelo said, grew 5.8% in the second quarter of 2025 compared to last year. And the inflation was 5.4% in the same period. So even considering what Cassiano mentioned, operating expenses grew at the same pace as inflation with all the investments we've made in the transformation of the bank. And that shows that cost is under control. And even we are preparing for a slower growth in the second half of the year. Now we can see a growth in the OpEx. And as we already have some of that in the numbers of the last quarter last year, I believe that now the line item other will be adjusted. Yes, about the guidance, yes, the NII guidance remained the same. Our NII net of provisions will be BRL 39 billion, which is the midpoint of our guidance between EUR 37 million and EUR 41 million. So our guidance, as Marcelo mentioned, we are at the top range of the guidance. So our NII net of provisions can still grow in the second half of the year compared to the first half of the year, but always cautiously because we are building our portfolio with full collaterals. But every half year, we have seen a growth.

[Interpreted] Let me add to what my colleague said. When we look at all the expenses, personnel, administrative and other expenses under our control because under our management. All of this has been approved, obviously, but we are growing 5.8% in operating expenses, even with all the investments made in consulting, in technology, and we are growing in some important areas of the bank, for example, technology, data scientists, data engineers, developers. We have a bigger team now. And in time, we see that it will trend towards a normalized curve. But in relation to the NII guidance, I mean, this is our target, but always net of provisions. And that is perhaps more important than the net income margin, which could be a bit higher or lower. But I mean, what is really important is the number we see at the bottom line. And that is the number we look at with a lot of discipline and risk-adjusted return. So we will not stop doing business. I mean I hope I will be favorably surprised because I want to do more. And when I say I want to do more, I speak on behalf of my team. We want to do more, but always looking at risk and our current risk appetite that we've imposed to ourselves because we want to grow, but we want to grow perennially, reaching a higher level of both profitability and return.

[Interpreted] Thank you, Pedro, for the question. The next question come from Gustavo Schroden from Citibank.

I will agree with my colleagues and give you congratulations on the earnings. We see the bank is back on credit in terms of revenue and the loan book. I'd like to go back to Leduc;s question on expenses. We can see, I mean, on the one hand, we see a reduction and adjustment in the bank's footprint initiative to prepare for the future. But still, I mean, it still has not translated into numbers, so to say. I mean you still have high numbers. I mean, so do we believe we can continue to improve efficiency? Or are we going to see a slower efficiency improvement? Is that going to happen this year or next year? Because I think this is important for us to calculate the ROI. I mean, because when we look at revenue, it seems to me that everything is on track. Next, looking at trading and market NII, the soft guidance was BRL 0.8 billion, and it's already at BRL 700 million. So can we exceed BRL 1 billion because we already have 2 quarters ahead of us this year.

[Interpreted] Thank you, Gustavo. You have a nice background behind you, great. Cassiano , would you like to answer the question?

[Interpreted] Yes. Let me begin talking about treasury. I think it's really important. Our guidance was from BRL 0 to BRL 1 billion. Today, we believe the soft guidance would be BRL 700 million and BRL 1 billion. We don't expect a drop in the second 2 quarters of the year. But this is a mix, as Marcelo said. It is our asset and liability management, our trading desk. And -- but there's also a lot of work that we do on ALM, which is part of our structure. It's not something we do isolatedly as setting up a trading desk. So I mean, we're working between BRL 700 million and BRL 1 billion. This would be a reasonable number until the end of the year. The next 2 quarters will be more challenging, but we have a good strategy. Now from the viewpoint of [indiscernible] I mean, we said that we would have 52% already in 2025, so that we'll have more improvement as of 2026. So that still applies. But we've had an improvement of 3 percentage points already this year with very rigorous cost control. 5.8 expense -- operating expense growth is not a trivial number, especially if you consider the investments we are making in the change the bank initiative. 5.8%, I mean, and if you look at administrative and personnel, 4.9%, so I think these are important numbers because we are executing according to the plan, even better, 3 percentage points better. We believe we will keep that guidance, but maybe in 2026, we'll have better results as well as in 2027, then we'll see more efficiency gains. It's good to see you, Gustavo.

[Interpreted] Let me also add, Cassiano. Gustavo, thanks for the questions. The EIO is not a paradigm. We -- the efficiency ratio is not a paradigm. But we told you that we have a target in the long run. However, this -- I mean, the efficiency ratio is not a paradigm for us. If we believe that we need more expense to gain competitiveness, then we will do that because the key word for us here is competitiveness in the short run and also in the long run. So if we can gain competitiveness, then we will do it. Remember, when we disclosed the guidance by year-end in 2024, if you said it was conservative, but we said, look, we will not stop any investment initiatives. We will continue the bank transformation in agriculture, in corporate platforms and in all of the initiatives. We continue to invest in technology and growing the team. So of course, that adds to our expenses, and we are talking about this. It also generates pressure in terms of labor, but we are on the right track and executing our plan. The plan is a straight line. I mean you make adjustments, but we follow a straight line. And we are following all the steps in our plan with great deliveries according to our expectations. And Cassiano mentioned that we have a more favorable expectation looking at our origination in the wholesale bank, in the treasury deals and in all other teams, the energy trading desk, I mean, we see great opportunities to do more business. And let me tell you, I mean, sometimes you may ask, is that nonrecurring net income? I mean, we don't originating. We continue to originate. You close the deal with the customer and then you're thinking about the next, right? That's recurring net income. And this is what we mean when we say step by step. Thank you, Gustavo.

[Interpreted] Next question from Mario Pierry with Bank of America.

[Interpreted] Again, on my side, congratulations on the results. I'd like to focus on growth that you're talking about you expect a slowdown of the portfolio with the portfolio growing close to 12% and in your guidance, 6% to 8%. I'd like to understand in what line items do you see this kind of slowdown? And why are you so comfortable in terms of delinquency? Nora, you said over and over that you're comfortable that you're not seeing a worsened delinquency. Well, the economy is slowing down, you're becoming more cautious, but at the same time, you're keeping provisions and delinquency under control. What metrics concern you when you look at the economy? And what metrics do you see that give you comfort that delinquency will remain under control?

[Interpreted] Thank you, Mario. For starters, there is a second variable here, which is the baseline of the last quarter. It is higher. So variation or relative variation can be lower. In addition, we have a lower demand for credit in the market. This is what we observed in the recent data published by the Brazilian Central Bank. It is only natural. With a high real interest rate and a 15% Selic rate, it is only natural that there will be a lower demand for credit. What makes me comfortable though is what I said during the presentation of our earnings. First, metrics, vintage by vintage, line by line, product by product, modality by modality, with the right pricing, risk-adjusted return, adjustment of the models and dynamic policies and the choice of those segments that present lower spreads, NII but a much higher risk-adjusted return, which is the case of FGO FGI programs and other secured lines such as payroll deductible loans. So let me give you one example, one piece of data. If you look at our payroll deductible loans portfolio, you will see that we grew by 4% quarter-on-quarter, slightly above 5% year-on-year. But please note what happened in payroll loans. The banks have agreements with the companies. And there was a change in the private payroll loan via CTPS. However, we prepared for that. There are some people operating at much higher volumes. But we kind of had a reduction. We did not operate with that change because we had 2 payments here. The first was in May, the second one in June. of the amount of the companies. And secondly, [indiscernible] published a delinquency rate observed by the market was higher than 16%. So we prefer to be down towards because the bookkeeping was not very robust. So when the payments were made, we had a lot of problems of reconciliating the numbers. In our case, with small amounts. And we preferred not to run risks. In our case, it was above 5%. And these cases have been practically solved. And why? Because we operated with a restrictive policy. We only wanted to operate initially with the companies that we knew that had agreements with us. And we only operated with employees who had been with the companies for at least 1 year [indiscernible] restrictive policy. Now that we're gaining confidence in the process, the trend in Bradesco is that we'll gain share because we have a lower market share, but with a much safer credit because I have to grant credit looking at large companies and their employees. It's a certain risk. But looking at a small company for an employee who has been with the company for a little time, it's a different risk profile. And that's why we are leaders among the private banks. We have significant high deductible loan, which decelerated in the last quarter because of biometrics, but this is expected to resume growth. So the metrics are risk adjusted return, monitoring vintage by vintage, choosing those segments with lower risk, but the demand tends to be lower and the baseline is different. So again, we are stacking these loans, FGO FGI, more long-term payroll deductible loans and the secured loans that we trust more.

Thank you. Next question comes from Jorge Kuri from Morgan Stanley. Jorge, floor is yours.

Congrats on the numbers. I wanted to ask about net interest margin. Your margins were close to around 5% in the past. They're at a little bit below 4%. And that seems to be what's dragging your ROE down. Like you've done a relatively good job on the expense side. However, your efficiency ratio continues to be quite high because of that margin pressure that you've seen over time. So how do you think about the path for normalizing net interest margins to levels closer to 5%, so that your ROE can really tick up to the high teens? And to what extent it's your balance sheet sensitivity to rates. So if rates are 12%, 11%, 12, 24 months from today, how does that help your margin or not? How does continuing to grow, particularly on the lower income segment where you can generate higher spreads contributes to that. So walk us through your -- I would say, your next 24 months of net interest margins, what are the puts and takes? And where should that normalize?

I'll start answering that. The expectation for NIM is that it will grow safely. Here at Bradesco, we focus on risk-adjusted return of our operations. If we find a good opportunity with low spread and very high RAR, we do grant the loan and we expand our portfolio. NIM is the consequence. RAR is the objective. Our NIM is growing because we are finding good opportunities in those lines with a slightly higher spread but with adequate RAR. That's the first point. Second point is because we are pricing the macro risk that we see coming with a decelerating economy. So there's a macro moment favorable for banking spreads, Central bank data reflect that. And this is reflected in our NIM and in that of the other banks, it is not by coincidence that other banks are also posting increasing NIM. In our NIM, it was 8.8%. It was 8.4% in December. And the trend is that this will gradually get close to 9% by year-end. But we don't have an explicit target for that, but it is though a trend that we are observing in our analysis. It seems to be a trend of recovery. And then you asked about the sensitivity of our earnings to the interest rates. And here, I'm going to focus on 2 aspects. Market NII. Cassano mentioned that our market NII increased from BRL 2.2 billion last year to between BRL [indiscernible] billion this year. So higher interest rates do have a negative impact on our ALM. Next year, if the scenario is confirmed of a declining interest rate we would normally see a recovery of this line item. Our Chief Economist at Bradesco expects the Selic rate to be at 11.75% by the end of next year. So we have to do our best to work internally and see if the scenario will be confirmed. Second aspect about interest rates is the impact it has on the economy. That's what Marcelo mentioned, a gradual slowdown of the economy. What we expect in terms of economic slowdown is a gradual deceleration more than we expected 6 months ago. So the macro risk reduced in the last 6 months, high interest rates, but showing a labor market that is very robust and a very gradual slowdown of the economy, which allows the banks to adjust their NII to face this deceleration with a match being positive or neutral in terms of profitability for the system.

[Interpreted] And could you let me add to that. That's a good question actually. You asked about the expectations regarding NII and NIM. And I answered that before. NIM, of course, we wanted to grow, but it is not the most important indicator. We have to continue to grow our NII. And that growth came from better liability management, reducing the cost of funding. It came from this stacking of portfolios that have a much higher risk-adjusted return. So this is adding NII with longer maturities. And I think that we have room to continue to grow. Yes, we have room to grow our NII with our client credit operations. And I'll take your question and speak about -- because I spoke about the quality of the portfolio overall. So our loans are very much under control. Auto loans very much under control. But we have been granting more auto loans for new vehicles and heavy vehicles with a better credit quality and delinquencies under control, overnight the NPL under control. But we see an opportunity. There is a positive RAR for a part of used vehicles until a certain age of the vehicle. So we do have an expectation of growth, just like this expectation of growth in private payroll loan as long as it is well adjusted and we can gain market share. So I see an evolution of NII is very important. In the ER efficiency ratio that we talked about in the previous question, we tend to grow, but we are very convinced about the growth of our NII with good efficiency ratio and good quality of the portfolio.

[Interpreted] And the next question comes from Henrique Navarro from Santander.

[Interpreted] Congratulations on the earnings. Congratulations, Andre, also for the communication, it's very good, so it helps reduce volatilities. My question, the second quarter showed that Bradesco is on the track to deliver the right higher than the cost of capital. So now I keep thinking about the next step. And taking question, if we have a better -- we have better market conditions if Selic begins to fall as of January 2026 and delinquency under control. And when we look at Bradesco transform, we will begin to see more tailwinds in 2026. So what could be a possible number? I mean what's the size of this expansion in terms of quality and profitability, which will naturally happen in 2026. Can we think about 17% or 18% ROE or ROI? I mean just a number we'd like to have so that the market can align if -- I mean, what would be the structure of Bradesco ROI?

Thank you, Navarro, for the question. Well, as we've said, we do not promise what the ROI would be or what the ROE will be. But we will do everything in our reach to deliver higher profitability, higher net income, higher revenue, expense control, higher quality of the loan portfolio, and we'll do that quarter after quarter. I mean, step by step, and that has not changed. So we will keep our promise. Of course, we do have the expectation to be able to continue to evolve. But if we would now go back to February 8, we expected the interest rate to be 13%. So the cost of capital would be lower. I mean, we would already be delivering the right numbers now. But I mean, we don't promise anything about that. But I believe the balance sheet already has consistent results as I mentioned earlier on, I mean, if you look at the operating result, I think it's the best snapshot we have looking at our balance sheet. Now how much that will be? I mean, we expect to continue to grow with good deliveries, stacking our portfolios. And there's something I didn't mention when I answered [indiscernible] question, but I'll do it now. I mean, in addition to stacking our portfolios and controlling liabilities and having the right segments and good credit policies, I mean, when you have a segment where the delinquency, the expected delinquency is lower, you do face more competition in those segments. Well, we launched a 5-year plan only 18 months ago. So we still have a long time ahead of us to execute the plan. And what we want to do is to improve profitability quarter after quarter, step by step continually. Now talking about the ROE, the idea would be to come to the cost of capital. I mean we have a double target in the short term, the cost of capital. And in the long run, we have to continue to work in the long run. That's why Marcelo said we will continue to invest in the bank transformation because that will ensure competitiveness in the long term. And then I mean, if you want to calculate where we want to get, we have to continue to work to improve efficiency and 40% would be a good number, good ambition.

[Interpreted] Let me add, Navarro and tell you. I said the same thing in the interview with the media. We feel highly excited at everything we're doing at the bank. It's a straight line. We just make dynamic adjustments, but we feel highly confident a few deliveries are better and then we make adjustments. I believe we have a lot of traction in the organization, high engagement and all teams in the organization, all areas and in all customer segments. Thanks for the question.

[Interpreted] Thank you, Navarro. The next question comes from Eduardo Rosman from BTG. Rosman?

[Interpreted] I'd like to hear more about collateralized portfolios, especially those that are backed by the government, either by FGI, FGO, [indiscernible] and other government programs. I'd like to understand the magnitude of this market, the size of this market. I mean the impact on RAR has been good. But what about the future? Can we have an even higher return growing these portfolios? Or are we going to have to find new ways to monetize these customers or maybe have less cyclical, less cyclical effects. I'd like to hear more about that from you.

[Interpreted] Thank you, Rosman. Thanks for the question, and thank you for joining us. It's a pleasure to see you. My answer is that this portfolio, I mean, I don't know the exact number, but looking at all of these government programs, FGI, Pronampe, [indiscernible], I mean, this year, up until June, the amount released on the market is the same as we did in the full year 2024, the whole market. So the volume has grown. We -- I mean, last year, we said we ranked second with 18.3% share. Now we've gained market share in this business. But however, this portfolio have a risk-adjusted return only if you follow your models because you have different models for different ranges and also depending on the program providing collateral. So Andre and the teams and even myself, we're always talking about this. But obviously, when you do that, you are building a long-term relationship with customers. And then you begin to know these customers and you have more fees from that customer because that's a long-term customer. So we're not doing just that. If you look at direct credit or personal credit, our margins are lower. Why? Because we do have restrictions. But who do we provide these loans to? We have a few people, high income that will take -- will accept personal loans. However, there will be a lower return, a lower rate. But if I grow, if I increase the rate, I am not going to have this high-quality customer. So we want to attract the best customers, customers that will pay our due date. So maybe the spread would be lower. But when you look at personal credit or individual credit, the rates are usually very high. So we're looking for a point of balance. And what you see here is also a reflection of the work done in different areas. For example, credit cards growing about 20%. The consortium is also bringing a lot of traction, fees and commissions. Again, we're doing real estate. Our growth with companies in the investment bank, growth in the distribution, generating business for our treasury desk. So I mean, it is work done on all different fronts. I mean if you look at the insurance group with all the distribution because you have external channels, but also, we still have our own internal channels. So I see growth with diversification on different lines of business. As I mentioned earlier, another line of business that can be important for us with a very interesting RAR and a higher spread would be to increase our share in used vehicle loans. I mean, not all kinds of used cars, but I think we can have more participation in this market because the RAR is attractive. And so I believe it is this balance that will continue to bring growth with profitability to us and actual relationship with these customers, building long-term relationships as with mortgage or real estate financing, which is a relationship with individuals, but also with companies, even though the rate can be a bit lower.

Thank you Rosman. The next question comes from Carlos Gomez-Lopez from HSBC. Carlos?

Congratulations on your next positive step. I think you have 6, and these are typically 12-step programs. So you have another 6 to go. I have 2 questions. The first one to Ivan, who has been there all along, and he's responsible for almost 40% of the company. So the insurance business continues to do very well. I wanted to -- but you imply lower growth for the next of the year. So I wanted to ask you what the evolution is going to be in the second half, in particular in health care, which in my account has had very high profitability. How sustainable is that? And what leads you to maintain the guidance for insurance? And second, could you define once again what your cost of equity is?

[Interpreted] Okay. I think Ivan is connected.

Carlos, thank you very much for your question. What I can tell you is that we are very optimistic. I just talked to the press, very optimistic regarding the new guidance of the insurance group as a whole. Secondly, regarding health care. we have been seeing in Brazil a consolidation trend in the private health insurance segment, the number of MCOs, the regulatory challenges. They are all components of our interpretation of this consolidation. Well, what you will see is that this market of private health insurance, we see it very positively, particularly with the basic need for protection in this area by the Brazilian middle class, approximately 100 million people, people who need health care protection. At the same time, we do not see nothing very incremental, nothing very different in this segment of public health care, which leads us to believe that private health insurance will be the solution for the Brazilian people. So we have a positive look of the private health insurance and we intend to take part in this growth in the several phases of our chain of action. So we operate with Bradesco Saudi and Odontoprev, which ensure the lives of about 13 million beneficiaries if people look at the 2 operations together. They benefit Brazilians with high-quality solutions all over Brazil. We also execute a robust program of investments investing primarily in our network of hospitals through a recently created arm called Atlantica Hospitals. So we have a very positive approach to this market. We will continue to invest in it, Carlos. And we see this market very positively. I don't know if I answered your question, and I remain available if you need any further information.

Yes, I was going to say you have made about BRL 900 million in health every quarter in the last 2 quarters. Is that a sustainable level? Or is a period and we should go back to something like the historical returns.

Ivan, would you like to answer that?

Of course, we cannot really give you any numbers at this point. In the first half of the year, our company operating in the private health insurance segment published a very robust earnings and this is published in our results. For the second half of the year, we do envision some difficulties, but more related to the indexes. Of course, people will be using the health care services, and we will be prepared for that. The point of attention would be the financial indexers because given the macroeconomics, they might change either because of IPCA index or even the Selic rate. So these are points of attention. But in structural and operational terms, reducing medical loss ratio and in terms of gaining new lives in the several regions of Brazil. Earlier today in the press conference, I mentioned the new product that we just launched in the region follow through in Mato Grosso and Mato Grosso do Sul to bring a new understanding of private health insurance in the Midwest of Brazil. South and Southeast regions of Brazil are very well covered. And we are growing strongly in the Northeast region gives us a lot of potential more recently in [indiscernible] private health insurance, bringing new clients, new customers, new lives to our portfolio. The trend in the next 6 months is to increase the balance of under the scope of private health insurance, adding to this number of 13 million beneficiaries that I mentioned earlier. So regarding the cost of equity, Carlos, what we have observed is that cost of equity in the last 18 months has been oscillating between 14% and 16%, depending on market and economic conditions. Our last survey with sell-side analysts indicated a median estimated median by the analysts of 15.6%, already dropping vis-a-vis the previous survey. So it seems that there is a trend for slight reduction looking forward. But of course, we don't control this number. We pursue this number. We monitor it, and we intend to get to that number as quickly as possible preferably. And thank you for the questions.

[Interpreted] Next question from Bernardo Guttmann with XP.

[Interpreted] Congrats on the of the results of the bank. My question is about the agribusiness portfolio, which continues to grow significant with delinquency still under control even in a moment where we have seen clear signs of deterioration in this segment. How can you explain your more resilient performance? Is it a more structural profile of the portfolio concentration in midsized and large clients, greater guarantees, lower exposure to subs is it linked to an active risk management that avoided a worse. And looking forward, does the bank remain comfortable in maintaining this pace of expansion in the agribusiness portfolio?

[Interpreted] Thank you, Guttmann. Thank you for joining us. It's always a pleasure to have you on board. Well, it's actually those 3 factors that you mentioned. It's all on the table. Of course, we have models to operate with certain ratings. Look at some crops. For example, we have some traditional clients with us in the agribusiness. The bank has an important share of this sector. We're very active in several regions of Brazil, but it is what you also mentioned. There are crops that have a slightly higher risk. There are crops that have a positive margin. They've had a positive margin over the years. I see the Brazilian agribusiness as centers of wealth. And of course, there are some exceptions, some sectoral exceptions or some exception companies, either geographically speaking or by crop, we do have an effective market share, and we have a dedicated team to analyze that. Those platforms that I mentioned in the presentation, Guttman, we have specialized team that we have. Agronomists working together with our managers in the conversations with the clients to understand details about the farms, crops and we have all the technological support to monitor. We have a credit team specialized in agribusiness and specialized in different crops also supporting us. And we have a group that analyzes periodically the risks and this group helps the managers understand the risks. So yes, we are comfortable in expanding this, but expanding for what? Certain crops for which we have a controlled expected loss. And we intend to expand to companies that have acceptable ratings for us. And this is, 100% of what we do in rural loans. All of them are secured loans. Most of them were the trusted, valuable guarantees. You might have strong or weaker guarantees. Yes, that happens, but we are very confident about what we see regarding our NPL. And I'd like to highlight in the month of May, we saw a slightly greater deviation, but then it returned to the expected level even with the John Deere Bank. And year after year, we can see in the month of May, it increases a little bit, then it drops again. So there are some characteristics in the agribusiness that you have to know about. And yes, we are comfortable to continue to expand. But considering our criteria in our business unit, we have a portfolio management. And we sue AI-backed model to monitor together with our economy group to analyze expected loss. And I'm not talking about past due loans, okay, Goodman? I'm talking about the life portfolio. When we see signs of potential expected loss, we do active management. And operationally speaking and actually on a daily basis, we see signs and we observed them for the whole set of companies from small business to middle market. And thank you for the question.

[Interpreted] Thank you, Bernardo. Our next question from Eduardo Nishio from Genial Investments. Nishio?

[Interpreted] Congratulations on your results. I have a question about strategy. If you could provide an update because a few things, we can see; a few, we don't see. In this quarter, you reduced -- you further reduced the footprint. We can see some relevant numbers, 14% fewer bridges only in this quarter, a 5% reduction in the number of bridges. The overall footprint is down 23% year-over-year if we also add branches or points of sale. Now in addition to the footprint reduction, what other initiatives we have that will release value in the next few months? And looking at the numbers, the guidance update and other numbers, I can see you were a bit more optimistic in terms of the plan. So can you please let us know what is working well, what not? What can you tell us about that?

[Interpreted] Yes, Nishio, it is true. We feel optimistic about the outlook for the bank. Of course, we remain cautious regarding the economy, but we do feel optimistic. Maybe Cassiano could begin to answer, and I can add something else in the end.

It's a pleasure to see you. Yes. I think Marcelo spoke about that. And you mentioned the footprint reduction. But I mean, what we're looking at is return and efficiency. So controlling expenses as part of the equation. We are always looking at the cost to serve. And that's really important. Again, productivity, that we've improved using technology. And today, Marcelo provided a few more details. That's one of the foundations of our plan, massive use of Gen AI, upskilling of the whole team, especially in technology and the principal segments growing, we will have 40 new units and a significant number of new customers. Now, further penetration rate in terms of technology, the new app and the Internet banking services for companies, all of these are important business levers. The concentration of the liquidity optimization is again a very important element. We are also reengineering our legal processes. And that's something we do every day as part of our daily activities, looking at labor losses and other losses. And also the new concept of the digital mass market, so having the right resources for the right customers, so we already have a number of customers, a few million customers served by the digital platform. And that is something we're growing. I mean it's a profitable segment when you provide the correct level of service. So these are the pillars. These are the fronts where we will be working in 2025, and you will see the evolution in many of these aspects, especially technology. So we now have a quicker time to market. We've had a 94% efficiency improvement. Marcelo mentioned that today, we're doing 4x more in technology than we used to do in 2023. So these are the levers that will help us accelerate. So Bradesco culture has engaged all employees of the organization to do differently to bring ideas, to bring new solutions so that we can continue to develop the bank. I believe this is our future.

[Interpreted] Let me also add, Cassiano and tell you that about what we have been doing, what we have been delivering can be seen in operating numbers. We have consistent operating numbers. But he mentioned a few points that can help us release more value and continue to execute our plan. We'll close the year with more than 50 principal offices and about 400,000 customers, and that will grow even more. Also, our segment of companies will continue to grow, especially now that we have a new segmentation. Small businesses will also grow. I spoke about our initiatives in the wholesale bank, including new cash services for large companies and also for SMEs. We have a large number of initiatives that have come out really strong with a lot of support of technology to improve productivity, always backed by Gen AI. So we will have more news, and we will be talking about that in the next meetings.

[Interpreted] Thank you, Nishio. The next question comes from Renato Meloni, Autonomous.

[Interpreted] Congratulations on the results. First, about the payroll deductible loans for private companies. You said that in June and July, you would be able to begin to grow with this product, looking at the better collateral conditions. And you also said that you would be growing also outside your customer base. Is that happening? Have the problems been solved? And also, I'd like to understand what we need to do to protect the customer base? And does that have any impact in terms of personal loans? And if I may, talking about agribusiness, I think you have a clear intent to grow there, although the moment is not really very favorable in terms of agribusiness loans, but this is a winning industry. And so I'd like to understand about the capacity to grow agribusiness loans in the next few years.

Great. Thank you, Renato, and thank you for participating. I'm happy to see you here again. Now in terms of payroll deductible loans for private employees or employees in private companies, we prepared for that. Until we had the new regulation, the new rules for that, we had agreements with companies. And so we would do the transaction directly with the company. Now after the new regulations, we begin to use CTPS, not really using our channels, but you have to use CTPS to sign these loans. And we had a lot of work to do to do the paperwork. I mean, I provided the loan, I disbursed the amount and then I need the approval by the company and then the funds are transferred from cashier to the bank and then to the customer. So what we could see was that the process was not really well oiled. I mean we had 2 payments, as I mentioned, recently. The second was a bit better than the first one. But looking at the market, the delinquency was higher than 16%, which is very high for this type of loan. When we talk about protecting the customer base, I mean, we already have deductible -- payroll deductible loans provided to the companies that are our customers. And we want to protect that business. But I mean, first, we did that according to our own criteria. So the answer is yes, we will continue to grow. We will begin to accelerate. And now we will trend towards gaining more market share. Why? Because we are a market leader. If you look at the public sector payroll deductible loans plus private plus FGTS, which are usually separate. I mean, but if you look at all these 3 buckets, we are market leaders. We are ranking behind 2 public banks only. However, in payroll deductible loans and private companies, we do not have a big share because we only provided these loans to the clients that have their payroll with us. So -- but I believe we will now begin to grow because now we have the new regulation. I mean I said the market had 16% delinquency. We had 5%, which is high for us. But we will be able to solve that. Why? Because we have a small customer base. We know the companies, we know the customers. So that's my expectation. And then you asked a second question about agribusiness. Maybe Andrea can answer.

Yes, as Marcelo mentioned, agribusiness is one of the most vibrant industries in the economy. And we see a favorable outlook for the second half of this year and for the next year as well. And we also have good opportunities to grow our agribusiness portfolio. We just have to find the right customers, the right credit lines and the right collaterals. But yes, of course, it is possible to grow our portfolio in agribusiness, right? With the right crops, the right geographies, the right rates, the right loan rates and the right collaterals according to our criteria, that's what we will do, Renato. Always looking at our risk appetite and still continue to grow, doing good business with our customers, providing loans for equipment purchase, including John Deere transactions.

[Interpreted] Next question from Yuri Fernandes with JPMorgan.

[Interpreted] I am another person congratulating you on good earnings. Most of the questions have been asked. So I'll be more technical in my question. Something regarding the DTAs. Here, we consider the consumption of DTA. There was an increase, slight increase in DTA. So I'd like to understand why DTA is increased? Because if I look at the bank, everything is better. I know it depends on which [indiscernible] generates credit and I understand that with 4966 something has changed. And you should stop generating so many DTAs. So what happened in this quarter? And what is the trajectory of use of these DTAs? Because it has an impact on your CET1 and it could be a good driver for market NII. So I'd like to understand a little bit about the DTAs.

Good to see you, again. I'd like to ask Cassiano to answer your question.

[Interpreted] Good to see you. Well, that’s a simple answer. In this quarter, there was an increase in DTA related to the provision we made to neutralize gains coming from the comprehensive transaction program because -- so that generated more DTAs. That was a one-off case, a specific case. And the more we grow step by step, we will consume more DTA. And that there was no deviation. This has nothing to do with 4966 and nothing to do with credit origination itself. This is just due to PTI, the comprehensive transaction program and the provisions we made for labor. The provisions for -- the provisions for fiscal claims and labor claims. And regarding the expectation of using the DTAs in our report of economic and financial analysis, we present a scenario to consume the DTAs in the next 10 years, considering full IOC payment, growth of the loan book. And we can see that the expectation is that there will be no capital consumption will be taxable base and to consume the DTAs. It's all in the report. Thank you, Yuri.

The next question comes from Tito Labarta from Goldman Sachs.

And yes, congratulations on the continued improvements in the quality of results. My question is, I guess, on your capital base. Core Tier 1, 11.1%. We did start to see shareholders' equity increasing a little bit, particularly as ROE is improving. And you're paying around 60% payout. I know you're maximizing interest on capital to take advantage of the tax rate. But just how do you think about your capital base? Would you want to increase that at some point, particularly as profitability should continue to improve from here? Where should we think is the sustainable core Tier 1? I mean if we look at the midpoint of your guidance, you get net income BRL 23 billion, BRL 24 billion, implies about a dividend of maybe BRL 13 billion, BRL 14 billion. Is that sort of the right assumption? And would that be -- could you increase capital in that perspective? Or should we stay around 11.1% or so?

[Interpreted] Our core Tier 1 had an index of 11.1% in Q2, exactly the same as Q1 with an expectation of stability in this indicator until the end of the year. In other words, everything that we need to pay IOC to enjoy to benefit, the most and grow the portfolio, we'll find funding sources internally, organically based on our profit generation, stabilizing this indicator. This is a very adequate level in our opinion, well above the minimum regulatory requirement and according to our internal requirements. So we have a buffer to take advantage of all opportunities that arise without an evident capital restriction. And as I mentioned in the previous question, in our report of economic and financial analysis, we consider a scenario in which we absorb our stock of DTAs without impacting our capital base. So that is a very realistic and stable scenario for our capital base.

We now close the Q&A session. The questions that were not answered today, our Investor Relations team will answer them immediately after the meeting. Before I hand the floor back to Marcelo to close the meeting, let me tell you on our Investor Relations website, we have the full presentation plus more details about our results. Marcelo?

Thank you, Andre. Thank you, Cassiano . Thank you all for joining us this morning. Thank you, all the analysts and investors who contributed with your questions. You can come and talk to us the whole sell side and buy side if you have questions about our quarterly balance sheet. Thank you all very much. Have a great week. Thank you. Bye-bye.

Good day, everyone. I am Marcelo Noronha and I am here at the headquarters of Banco Bradesco Cidade de Deus, on a Thursday, May 8, 2025. It is now precisely 10:31. It is a pleasure to be here with you to disclose Bradesco earnings in the first quarter of 2025. So thank you very much for all of you who are joining us. So I'll start speaking about our net income. You probably all had an opportunity to read the earnings release last night. Almost BRL5.9 billion recurring net income, growing more than 39% year-on-year and 8.6% quarter-on-quarter, with this level of ROAE of 14.4%. It is obvious that this result, the net income, is vertical surplus. I will speak about the causes. The main one driver -- the main driver being a revenue in three different pillars, which I will comment on momentarily, and with a very safe portfolio, intensive use of technology helping to increase our productivity and, of course, with a strong result from the insurance group. So these are the pillars of revenue, which are also a consequence. In a moment, I will speak about what's driving each one of these pillars. But total revenue was BRL32 billion and growing 15% year-on-year. We have this absolute growth seen on the chart below. So total net interest, 13.7 increase year-on-year, 1.4% increase quarter-on-quarter. Fee and commission income increasing 10.3%, and insurance growing 32.7% year-on-year. So we get to the first item or topic, which is driving our NII, net of provisions. So expanded loan portfolio totaled BRL1 billion bureaus to grow 4.9% year-on-year and 2.4% quarter-on-quarter, excluding John Deere Bank. The growth would be still significant, 11%. And we can see in the charts the level of growth that we had in each one of these segments of the loan book. Individuals, 16.2% with a relative growth that is growing. And micro, small, and medium sized enterprises almost growing almost to 30% year-on-year. Wholesale, banker growing 1.2%. And if we didn't have the exchange of depreciation, this number would be higher. But here in the wholesale bank, as I normally say, we got a lot of traction in each one of the segments of the wholesale bank. But there are quarters with a BRL10 billion increase and in another quarter, a decrease of BRL10 billion. For some reason, the capital markets here, DCM, is very active. A lot of company getting loans. We are having issuances. We are participating in those. And we also have the secondary market with our origination book for distribution. If you look at the main publication, you will see a TVM reduction of the wholesale bank of BRL7 billion year-on-year. And I draw your attention to this. In order to get to that ROA of 14.4%, which, by the way, when we communicated our results in on February 08, 2024, the cost of equity was below 14%. Today, we would be above the cost of capital, but we're not worried about that. We're looking forward because we have much greater ambitions, and gradually, we will achieve them. So looking at our loan book. We have traction in all of the business units and business segments, but our credit business unit has very important deliveries. We increased our headcount. We have intensive use of machine learning, better credit modeling, better credit policies. And in the last quarter of 2024, it said that our risk appetite was more moderate for the year of 2025, and that continues to apply. And we adjust our models all the time. And we assess this relationship of the team led by Andre, the business unit, and each one of the segment heads, well, they have an excellent communication. We don't have a lot of discussions to step on the brakes when we need to hold back a little or the opposite so that we can have a risk adjusted return, RAR. So we are working with the ratings. And we have a lot of growth in collateralized portfolios. So I'd like to draw your attention to that. Individuals grow 16.2%. Rural loans posted a significant growth for farmers, for cattle raisers. So this portfolio is 100% collateralized. Real estate financing. You just have to look at our LTV of origination, about 61%. You can find this in the main publication. And in the portfolio close to 52%. We continue to grow payroll deductible loans. Here for payroll deductible loans, among the private banks, we have the highest share, 14.3%. And here, we see an avenue of opportunities. For personal loans, we have good ratings. We follow the vintages one by one, and we have been growing with a lot of quality. And part of this is FGTS guarantee. Credit cards are growing in high income segments. This is what we see here. In the open market, we have been a lot more conservative regarding a loans for CDC. We also posted an important growth, another collateralized portfolio. I spoke about micro and SMEs, posting a 3.5% growth quarter-on-quarter and almost 30% year-on-year. And what has driven this for the companies? Working capital. This is growth which is fully collateralized. We're speaking about receivables and speaking about FGO and FGI. We have a lot of traction, as I mentioned, in the past quarter. Same for rural loans, CDC, and foreign trade finance. So we are very certain about what we are doing. We have consistent growth with an adequate RAR for our clients and for our business lines. And, of course, this drive, this distribution capability combined with good models, good policies, good processes, would not be effectively used if we didn't have a solid client base, a high penetration in all client segments, and commercial capability to make the business happen, not just with our army of managers in each one of the segments. And they've been working really well with very high engagement, but also counting on our digital channels and better and better CRMs supporting all client segments. Based on that asset portfolio. Our net interest income growing almost 14% year-on-year. And with a positive combination of cost of risk, we can see here 3%. It is absolutely stable. And with this, we had an NII net of provisions of BRL9.6 billion growing 30% year-over-year. And we also had a good performance in our market NII. And the main driver here was ALM. And I was telling some colleagues in our internal presentation last night. I told them our ALM continues to work and work really well. We had volatility in Brazil in the last six months. And this gives us an opportunity to make some moves working not just during the quarter, and they did that from January to March, but also looking forward and focusing on the first quarter of 2025. We had high activity with a lot of traction in the wholesale bank, and that creates a lot of business for our client desk. And, of course, there is a pass through via trading, the more activity or treasury activity we have with the wholesale bank, the more successful the trading is. And there was a third line item which was smaller and that is developing with good origination is the energy trading desk. It's not as material as trading or ALM for us, but still, we have that energy desk. And client NIA, BRL16.8 billion and growing 15.5% year-on-year. NIA increasing to 8.6% from 8.4%. And more than this important growth in my view is the consistent growth of our client NII quarter after quarter and with quality in our loan book. And we are going to explain that that more. And also client NII, net of provisions that grew 36% year-on-year, 5% quarter on quarter. And, again, we'll look at the bar chart, and we see consistent growth in terms of our client NII net of provisions because this has a bearing on our bottom line. The quality of our portfolio is not debatable. We have an over 90-day delinquency totally under control. We have the share of the loan portfolio by stages already with Resolution 4966. So we have some regulatory additional regulatory topics imposed by the Brazilian Central Bank. But the way we see this, 92% of our portfolio is on stages one and two and with a higher proportion. And in this stage of three portfolio, 35% are up to date. So they are they are paying. And also in terms of collateralized portfolio, we have this 54% to 57% in percentage with guarantees. But when we focus more on loan origination, this number is even more important for us. Another important element to highlight here in this quarter is exactly the restructured or renegotiated portfolio, whatever you prefer to call it. But this is a legal obligation by Resolution 4966, restructured portfolio, problematic assets, secured operations. So regarding Resolution 4966, it's important to tell our investors by side and sell side that the Resolution has its own characteristics, and it forces market players to treat certain elements in a certain way. This is in the complete publication in our explanatory notes. It explains each one of these concepts, and our team is available to you to discuss these items whenever you feel like it. So what I would like to stress here is that in the year 2024, we had a total portfolio of BRL39 billion. We reduced of BRL4.5 billion, and we get to this total portfolio in December. So we reduced BRL4.5 billion in 2024. In Q1 2025, we reduced it about BRL3 billion 2/3rd of what we reduced throughout 2024. So we are trending towards an even smaller portfolio considering these criteria. Another growth driver of our result is the set of fee and commission income. As you can see, I'm not going to address each one of the topics, but we grew practically in all of the items. We have high activity even in card income that is growing here in the best portfolios of middle income, high income. But we have two topics which I would like to underscore, consistent growth of our consortium business and also asset management and capital markets. Our IB, investment banking, grew year-over-year 76%, And we continue to have a robust pipeline. So we're continuing to give this business more traction to do business in our wholesale bank, combining all wholesale segments with our IB, both in terms of fixed income and M&A and repo operations. So this is another driver of revenue that brings us results, and it is boosted by our commercial activity and our relationship with our clients. Operating expenses, as you saw, 12% growth year-over-year, a reduction of 8.6% quarter-on-quarter, and I'll speak about this. We reviewed our footprint. So we have been reviewing our footprint with a lot of discipline and organization, achieving numbers that are higher than what we had planned. We had close to 1400 branches closed. So I have been mentioning this to you quarter-on-quarter. We have to include Cielo and Elopar. Part of Cielo is in Elopar. I'm talking about Elopar, Cielo, Elo, Alelo, and Cielo itself. The growth of our revenue is 8.8%, but we interpret everything in our balance sheet. And when we look at personnel and administrative expenses, we'll look at the growth year-on-year. It's lower than inflation. So it's I have a lot of control here. But it is also important to highlight that this is not bad. It's good. We have a transformation process underway at Cielo. We have been investing in Livelo and the other companies as well. They've been bringing revenues and results to us. It's accelerated. Distribution is good. Our insurance group continues to bring results. We have a smaller set of employees with the insurance group. Some more because they're also investing in growth just as our related companies here. We also grew in technology, in our credit business unit, in our CRM, in our data analytics department, in the enterprise segment, in the principal segment, in our corporate segment, which is our middle market. So we continue to invest, but expenses under control. Now the insurance group, we also see a lot of traction. I'd like to highlight two drivers. The ROAE, very high, 22.4% in this growth. Year-over-year, 25.3%, reaching BRL30 billion revenue from insurance premium, pension contributions and capitalization bonds. So as you can see here, our technical provisions are now BRL414 billion growing a bit more than 11% year-over-year. And two main drivers here, good management in each one of the pillars, a very good combined ratio in each business line, and commercial capability using external channels and internal channels, increasing our penetration in the customer base and bringing revenue growth from the insurance group. And now talking about capital ratios, the Basel ratio has grown 13%, and we see the JCP limit will be distributed throughout the year. Our guidance for 2025, as we look at this guidance I mean, we have an annual guidance, so that's for the whole year of 2025. However, we are trending towards delivering this guidance. At the end of this presentation, I'll make a few comments about this again. And so let me now move on to our final slides talking about our strategy. First, Bradesco Principle. We launched this initiative in October with three offices. We wanted to reach 50,000 customers and we have done so. We now have approximately 50,000 clients. We will now open 45 new offices this year, expanding service and the manage model for the middle market and corporations with more than 10 different platforms for the middle market. That has helped us grow our assets and the relationships with small and medium sized enterprises. We are leaders in this segment, and we continue to grow with secure loans with a very safe loan portfolio. And we continue in our cultural evolution with so Bradesco. More than 1,400 people have been hired in tech, and there are two more elements I'd like to speak about. Productivity in tech, we've been able to reduce the delivery lead time by 32%. And this delivery, I mean, in terms of applications, we've grown more than 53% in terms of business development hours, not only because we have a greater team, but also because we've improved productivity. And now everyone is making intensive use of GenAI, including Copilot, very much connected to our tech modernization initiative. We have enterprise agility with our tech squads throughout all levels of the organization, and our developers are using our GenAI using our GenAI we call BIA Tech. So one thing is BIA GenAI that is already serving 768,000 customers. Very soon, all our customers will be able to use our new BIA. But we have our corporate BIA for employees, which reads and rates our stories, and that has improved our productivity significantly. We've had a 46% efficiency gain in our developments. So we are using GenAI intensely to build our path towards using multi agents. So we set up a squad with 8 or 10 employees, a developer, someone from product, and you will have one specific GenAI for each pillar. So all the squads will be using GenAI to improve our productivity significantly. So we can certainly provide more color on this if you have any questions. But I'd like to speak about all of these deliveries. Yesterday, we disclosed two very important points. First, we've promoted two of our colleagues to be directors in our legal department. Araujo, who's been with us for a long time in the company, he's a very promising young attorney who will now take on all litigation activities in our legal department. The other new director is a colleague who has a strong relationship with our customers in wealth, banking, and he is Marcio Renato, who'll be our new legal director, also supporting global brand and all other business lines. For example, the investment bank needs a lot of support in writing contracts. And we have another executive director who will join us to be part of the legal team, bringing his vast 35-year experience in one of the best law firms in in Brazil, Pinheiro Neto. His name is Júlio Bueno. He will join the bank. He will start working with us as of July. We feel proud of this new team leading our legal department, of course, with all other colleagues in our legal team at Bradesco. Now let me move on to my conclusions. Let me tell you that our growth -- our net income growth is based on revenue, and that will continue. So revenue from different business lines and controlled expenses. Our loan book is under control. Our view based on RAR, looking at every vintage. So we continue to work very closely in our loan book because the quality of our assets is not negotiable. I always tell our team that quality of our assets is something we cannot negotiate. So that is why we have continued in this path step by step in a good track. And as you've seen, our transformation plan is now being executed in acceleration and very well done. So thank you for being with us. Let me now invite Cassiano Ricardo Scarpelli and Andre Carvalho so that we can answer your questions. But I still have a few brief comments before I give you the floor, if I may. I mentioned our guidance. And now what happens with our annual guidance? You've seen our expanded loan book. We have delivered above the guidance. The NII net of provisions also has a great number, so you can project our trajectory in the next quarters. So we're delivering above the guidance. These numbers will trend towards the guidance, but one thing is for us to be at the top of the guidance. The other thing is for us to be above the guidance. So if you look at these three lines, we are above the guidance. So that's the first thing we see. So why don't you review the guidance? Well, because we are still within the ranges disclosed in the guidance. However, if it's necessary, we will be willing to review the guidance in the second half of the year. The second comment I'd like to make, I had a conversation with journalists, and I got an interesting question from a journalist. I mean, if we believe we will have growth of 8% or 10% quarter-on-quarter, I answered no. We continue to bet on slow, consistent growth step by step. We have not changed our speech. We have a plan. We have not interrupted our investments. We continue to follow our plan with a lot of discipline. But my view is that right now, we are at the top of the basic interest rate, the selling rate. And the margins, the NIIs, they are more, under stress when you are at the top of the guidance. So what we expect is that there will be challenges in terms of NII, but my view for this year is much more favorable if you want to look at the midpoint of the guidance. We are trending towards the top of the guidance, from the mid to the top of the guidance. I believe we will deliver a result above this guidance. So I do feel optimistic about our performance. Although we see a slower growth in the second half of the year, this is what our economists have told us but we still feel optimistic in terms of growth because we see lots of opportunities to continue to grow in individual loans, payroll deductible loans. And regarding company customers, we can continue to grow loans with collateral such as receivables, CGI, CTO. So that will help us grow our NII. As we look at service and commission income, what are the offenders and what is driving the growth? Well, by the June, we may see a charge for instant transfers or BI acts. But we feel we are in a very comfortable position. Also, we will be launching a new cash model. And when I look at the bright side growth, I can see payments growing healthily as the main driver in revenue from service and a few related companies, you know, such as the consortium, but also payments will bring us more commercial traction and revenue. The third point I'd like to mention is the investment bank. I said we have a robust pipeline, and I believe we will also deliver a good performance this year. And the insurance group, I've already mentioned. So all-in-all, what drives our optimism is the low-end book, a very secure low-end book, good credit lines, higher intermediation margins, and more revenue from the insurance group. This is going to help us close a good year in 2025. That was it, Andre. Thank you, Marcelo. Thank you, Cassiano. Good morning, everyone. Let me tell you, the CEO of our insurance group is also with us. He is online. So you can ask your questions in Portuguese or English. You can send us your questions in in writing using the WhatsApp number on screen now, or you can send us your question using this email address.

Thank you. [Operator Instructions] First question from Thiago Batista with UBS. Thiago?

Hi. How are you doing? Good morning. Congratulations on the results. I think it was very strong across the board. My question is about the ROI of the bank. Not only you mentioned an ROAE of 14.4%, and you said that you naturally aim for a much more robust return for the bank. At the beginning, two or three years ago, you had said that the initial metric was to achieve the cost of capital. But now you said you want to fly even higher. So my question is, when we look at it by segments, we see the insurance group and ROAE of 20%, which means that the banking operation has returned close to 10% or slightly under 10%. So what's what do you still have to normalize? What are the main segments? Is it retail, wholesale, SMEs? I mean, what are the big boxes that you have where you still see some room to bring the ROAE to a higher level?

I'll ask Cassiano to answer, but I'll start. Thiago, thank you for the question. It's a pleasure to have you on board. Well, it's basically mass retail. This cost to serve is something we've been correcting. Over time, this will bring us a different level of return. For example, the wholesale bank. The level of RER is high in all client segments that we have. I'm not talking about IB or global markets because that requires much loss capital. Global private is high 30s to 40s. High income segment, the same. The principal clients, I mean, they are impressive in terms of level of return we have. And that applies to prime as well. With SMEs, we reversed the trend, and it's increasing. So that's what we are working on. And, of course, we're investing to gain productivity. As I mentioned, Cassiano, you can compliment.

No. That's exactly it. These are the levers. Productivity is one of them. And, of course, the effect of our cost to serve in our mass retail. This is what's going to give us the final leap to improve our ROE.

Next question from Daniel Vaz with Safra. Daniel?

Good morning, Andre, Noronha, Cassiano. Congratulations on the excellent result. It's clear that the bank has traction with good indicators. I'd like to take this moment with you to hear a bit about what we didn't read in the release, which is the part on private payroll deductible loan. A lot of people are discussing products. I'd like to get your take on this because you have a big market share, about 15% in the traditional payroll deductible loan. So what will be the position of the bank? Would you have portability of everything? Or how are you planning to operate in this segment?

Thank you for the question. Well, I'm going to give you some of my own perspectives. Sorry, Daniel. I called you Thiago again. Sorry, Daniel. It's a pleasure to have you. Anyway, here are some points in our review regarding that. Number one, we believe that here lies a great opportunity for Bradesco. You see, we have 14.3% market share of payroll deductible loans in the public setting at different levels of government, INSS, and private. But with private deductible loans our share is lower. Our share is much lower there, and private payroll deductible loans take up small space just about 6% of the whole 14.3%. So among the private payroll deductible loans, we are the biggest in terms of share. So we understand that here, there's a lot of growth coming from this. Perhaps the question should be, why is it that private banks or perhaps the mainstream banks, incumbents have not yet presented a great origination here? There are some important variables here. Number one, the client base that already had a payroll deductible loan increased between 16 April and 21 April according to that. Until then, there was an origination of BRL8 billion. So from our standpoint, what we did was we had an initially defensive strategy. Other more active organizations might have operated with their agreements in force but using a new channel. And others did not see -- I mean, did not see these clients that are -- or did not look at these clients that already had a payroll deductible loan. So let's suppose you had an agreement with me. Bradesco had an agreement with your company, and then you applied for a loan, and perhaps an organization offered this loan to you. But when that base increases, there is no more margin. So this is a credit with a clean risk. And that's why some organizations, even smaller organizations, which are more focused, have offered a slightly higher price with smaller tickets. Yesterday, there was another meeting of the working group with a data prep, FEBRABAN Federation of Banks regarding portability of these loans. So there's an organization that is closing. And, of course, we will now move to a more aggressive, active strategy rather than a defensive strategy regarding our client base and regarding the market. So we see a good growth expectation perhaps starting June or July when everything is very well oiled. And I would like to add one element, Daniel, that I think I should remind you of. We continue to have room to grow in public payroll deductible loan, INSS, deductible loan. But the level of delinquency of these two-line items is a much lower delinquency level. I'm going to give you a general number. Okay? General market number. The over 90 NPO is probably 2%. In the case of private payroll deductible loans that we currently have, our delinquency is more than double that. So approval is not just of the individual. We take into account the individual and the company that pays the salary of this individual. But in the market, and this is market information, is that the existing private deductible loans, I don't see this in the large banks. I think that the large banks have also a very low delinquency level. But I guess it has a delinquency rate that is higher, close to 9%. So here we have to work with good models looking at the individual and the company they work for. So these are variables on the table so that we can have the right pricing. Okay? Daniel. But we will be fighting for our market share. Okay? Thank you very much.

The next question comes from Mario Pierry from BofA Securities. Mario?

Good morning. Congratulations on the earnings. Now I'd like to hear a bit more from you about the insurance group. I believe the market does not yet appreciate the value of the insurance company, growing 25% year-on-year and accounting for almost 40% of the net income. We've seen lots of improvements. The level of claims has fallen. The claim ratio has fallen. So I'd like to hear from you whether you believe you can keep the same level of growth and the same level of claim rate. So, I mean, to what extent are these results sustainable?

Yes. Ivan is also here, but when we look at the insurance earnings, 2/3rd came from production and 1/3rd came from the financial portion. But production had a bigger weight, and that's what provides us more confidence that this is sustainable. So, also, you spoke about the improvement in the claim rate. So, of course, you have some seasonal effects and a bit of volatility, but it's trending down because of investments we've been making for a number of years to improve the claim rate. And we are now harvesting the benefits of this initiative, especially in health insurance. So we trend toward a lower claim rate. Actually, the first quarter was not even so favorable, and we do have noise along the path. But there is a very good trend down the claim rate. And because we have a lot of traction in sales, again, that is good for the insurance group because that will drive sales, that will drive the premium, and bringing the claim rate down. So that's the improvement we expect both in production and also in the financial portion with a higher basic interest rate. So we believe the performance will remain consistent. So we could see the ROAE 2.6% above the first quarter last year. After many years of improvement, we continue to improve. So insurance is one of the lines that Marcelo highlighted. We want to be closer to the top of the guidance, at least above the midpoint.

Mario, let me add. And, also, Ivan is here, and he can also add if he wants. But here, we see also our strategy, you know, the associations we now have with hospitals to improve the efficiency of our health insurance. We're growing our network of health care providers, and that also helps us control the claim rate and the cost. So the combination of these figures give us excellent earnings. And our concern in each one of the verticals, we want to always work to improve our operation and a very strong distribution. I mean, if you look at the future, we do see room for more improvement. Also, look at the penetration of insurance in the Brazilian GDP. We have a lot of room for growth, and I do believe we can have a higher penetration of insurance products. And of course, we will continue to work hard to improve this rate of insurance over the GDP. And all our colleagues are working towards the same goal. Now, Ivan, do you want to add to this answer?

Thank you, Marcelo. No. I believe Andre provided a very thorough answer to Mario. But if Mario has any further questions, I shall be available to help.

the next question comes from Gustavo Schroden from the Citigroup.

Hello. Good morning. Congratulations on the earnings. It's very good to see this traction that the bank currently has. Now, Marcelo, what is the level of comfort that you feel in terms of more growth in your loan portfolio? We can see the bank clearly has capacity to manage risk. And as you mentioned, delinquency is lower. The quality of the loans is a mantra for you as you as you said. But I'm also looking at the country's economy. Inflation up, a high interest rate. So what do you expect in the next 12 months looking outside the bank's borders? Because that may lead to a slower growth in in the bank. So how do you view these aspects so that we can also feel confident that the macroeconomic factors will not go against your very well-done work?

Thank you, Gustavo, for your question. I'll be very candid. Loan portfolio growth, as I said, our risk appetite remains moderate since the last quarter of last year, we said that. So one thing is risk appetite. The other thing is model adjustment, credit policy adjustment. So if you look at the concentration of loans, it is down. In the in the largest customers, the concentration has fallen. So although we have a moderate risk appetite, we see great opportunities because we have a large customer base, because of our penetration capacity, but we want to grow in secured loans. In payroll deductible loans, we have 14% market share, so we have an opportunity to continue to grow regardless of macroeconomic factors. So private payroll deductible loans are also an opportunity. But in public payroll deductible loans, we still have lots of opportunities to grow. Let me remind you, our book is now about a BRL100 billion in payroll deductible loans. The second front would be working with agribusiness, always customers with good credit ratings. I mean, in this segment of the economy, either cattle breeding or agriculture, when you look at the different segments, for example, corn, corn prices went up. They are now down closer to 50, but farmers are well compensated. As well, sometimes we do see issues, but not now. We don't see any problems in terms of these prices now. So this market can bring us a lot of opportunity to grow, to grow our relationships with the current customer base. Even the Zhuang Diaz Bank, we are now you know, the two teams are now working together. We're reviewing the guidance for this year. And in terms of small companies, Gustavo, in fact, I've shown you a ranking while this information is open to the public. So looking at FGO and Pronamp, why don't you check the ranking of financial institutions? You will see Bradesco currently has a lot of traction, so we keep a close eye in this market. And we're working with receivables, FGO, FGI, in terms of collaterals. And the same thing, we want to grow agricultural loans, but always with collaterals. So what do I see? I see that we have a great potential ahead of us. Obviously, when the economy grows slower, and that may happen in the second half of the year, so a few demands will be lower. But in these specific lines that I've mentioned, I have great confidence that this is the right track for us to deliver good margins and good net income even in the second half of the year without having any interruptions. So that's why I say the drivers are these three main lines. So always secured loans, loans with the right collaterals, and all the activities that will be related to that. NPS, for example, these are the fees generated by our robust pipeline, which we've had even in the first quarter. So I do feel very confident. Why don't you have a look at the FGO ranking? Last year, FGO plus FGI, these two collateral lines, these two guaranteed lines, we've had an origination of BRL89 billion. I mean, that that's what the market did last year. So these are numbers that you should watch and monitor, and then you will understand what I say and possibly feel the same level of comfort as I feel looking at the quality of our loan book, which again is not negotiable for us. So thank you, Gustavo, for the question. Good to see you.

Next question from Pedro Leduc with Itau.

Thank you. Good morning. Congrats on the results. My question is about LLP. LLP in the quarter increased at the same level of the quarter about 2% quarter-on-quarter with a very stable cost of credit. The question is that the pace of LPs, compared to NPL formation was much smaller, but it's not easy to get this conclusion. So I'd like your help on this because some things changed and the NPL formation is not in the release, 15 to 90 NPL is no longer in the release. So I'd like you to elaborate and to help us consolidate this because these slight changes or perhaps doesn't make any sense to look at NPL formation the way we used to because 15 to 90 day change then perhaps that's why you're not communicating this. But I just want to understand the pace of loan loss provision versus NPL formation Stage 3, what is more relevant, what should we be looking at looking forward?

Pedro, thank you for the question and I'll ask my colleagues to answer that. But I'd like to stress one thing that you mentioned which is important. Indeed, we were not going to mention NPL creation in the 15-to-90-day NPL, but we did include it in the presentation. NPL formation or NPL creation went from 109 to 98. And our 15 to 90 day in bill, which was 3.4% last quarter, continued flat 3.4%. And a year ago, I think it was a little over 4%, 4.1% down to 3.4%. So, indeed, this doesn't have a lot of sense. It doesn't make a lot of sense. So I'll let Cassiano and Andre complement the answer.

It is exactly what you said, Marcelo. With Resolution 4966, we will have to adapt and look at this new concept. So Stage 3 is super important. I liked Andreas' explanation of Stage 3. He will mention this. But Stage 3 is our main topic to pay attention to. There's not much comparability with 109 against 98 in the last quarter. That shows the robustness of our loan book. The Legacy WO Model can no longer be done. So this leads to a new way of looking at our loan book. So we have to look at Stage 3 quality. Our LLP compared to the portfolio, which has remained stable around 3%. So that attest to our ability to grant loans. Andre will comment on this. I just want to add something. You see, Pedro, I think that in the complete publication, there is a table where they reconcile what were Stages 1, 2, 3, what was included, what was excluded. And I think that this reconciliation is crucial for me, and I think that you should monitor that from now on. So what was done with 4966 regarding write offs? Because we can have a more lengthened term. We can change over 90. We don't lose portfolio because we are no longer writing it off, which did not happen to us, by the way. Okay, Pedro. We kept exactly the same concept we had with 2682, same write off period. So you can compare apples to apples. Andre?

Okay. So what changed in the accounting regime in terms of quality of assets is that until Q4, we looked at the operations in areas more than 90 days, over 90-day NPL. That's what we announced. 98% coverage in Q4 provisions compared to the over 90 provision. Before 966, we changed this to Stage 3. Stage 3 is a broader look and has almost double the value of operations classified as more problematic. So we have over 90 and the problematic ones, over 90 increases. And in Q1, problematic ones drops -- the problematic assets drops. So what in the economic financial analysis report, page 18, we have a table of Stage 3 moves, and we see what was included from Stages 1, 2, 3, the cured operations, and what was originated. Because the total put the provision in the numerator, we get to a 109% coverage. So in in a broader concept of quality of assets, we had a 9% provision in Q1 2025, which to us seems more than adequate. And if we get expected LLP BRL8 billion, give or take, we'll get to this a 109% coverage, and that's how we have to look at this. It's good to read explanatory notes because since last year, we made these movements very, very clear. So it's expected loss and divided by Stage 3. That's what we should look at. And during the presentation, in the explanatory notes, we have all of the criteria used with Resolution 4966 in detail. So thank you for the question, Pedro.

The next question comes from Jorge Kuri from Morgan Stanley. Jorge floor is yours.

Thank you. Good morning, everyone. Thanks for the presentation. Congrats on the number. Can you hear me?

Yes.

Yeah. Thank you. So I wanted to, explore part of the answer that Noronha gave, at the beginning of the presentation. Why you don't think you can get closer to the top end of the guidance, which was basically on the market NII. Noronha, I believe you said that with rates now peaking, you think that the next few quarters are going to be more challenging. So could you please maybe elaborate on what that means exactly in terms of numbers? You're expecting a negative result of market NII for the next couple of quarters because if it's just a bit smaller than the first quarter, which was BRL462 million. It's just really hard to see how your net income is not going to continue to grow from the first quarter number because of operating leverage, it said that much better seasonality as we move forward. And then that gets you to BRL24 billion BRL25 billion in net income, which is not far from that BRL26 billion which I believe is the upper part of the guidance. So maybe drill down a little bit of that, if you will. Thank you.

Okay. So let's speak about market NII, which is super important. Marcelo kind of touched on this, on the work that we do with our treasury. It is very focused, strong work. We were seeking the best opportunities and it was not different in this Q1. It was very important to consolidate our ALM, a market that was very volatile in the last six months, but we could work strongly on this concept of protecting our ALM or prefix portfolio. Indeed, we see Q2 being tighter. We talk about market NII between BRL0 and BRL1 billion which we confirm. We think it's very feasible throughout the year and this will lead us to have a certain robustness in managing the ALM. Treasury, as Marcelo mentioned, trading, there are a number of opportunities. So we understand that the soft guidance is valid. It is sufficiently well protected by this protection work that we did, work to create value in our prefixed portfolios. And this has worked on by our treasury. So I think that in that regard, we are doing very well. And looking our guidance, we normally are at the middle of the guidance. And that's how you evaluate us. Marcelo is talking about the upper range. So when we look at both ends of the guidance, it includes the potential of looking above the middle of the guidance. I think that this is fundamental to keep us attractive. We consider this as a very positive trend for the next nine months. And Marcelo mentioned, if there is a need for adjustments, we'll make adjustments to the guidance and we'll communicate that. Would you like to add Andre?

And also the income tax rate to do the implicit calculation in our guidance. We were talking about a rate between 19% and 23% for this year. But in the March, the National Monetary Council increased TJLP, potentializing the payment of interest on capital. We understand that for our stakeholders, we have to enjoy this benefit to the most. Increasing the benefit, we reduce the rate. The most probable range would be between 1821%. So at the mid portion, it would fall from 21% to 19.5% and with that we kind of adjust the opt implicit income in the guidance that you can calculate. But I would like to stress what Cassiano said. Jorge, we are more optimistic. Okay? Looking at client NII, the expectation was to grow 14% in the full year, right? Yes, to be in the middle of the guidance.

The next question comes from Rosman.

Hello. Good morning, everyone. Congratulations on the earnings. My question is about the profitability or the income growth. You said the recovery will happen, but it's gradual. So sometimes when you look at just one quarter, it's difficult to have a general view because maybe in this quarter, you are building the foundation. And on the following quarter, you may have a higher net income. But we saw a leap between the Q4 2024 and Q1 2025. Today, I feel you are more optimistic. So was there any surprise internally? I mean, did you have a better reaction to change? Did the loan book grow more profitable? Or maybe you were talking about lower income customers that are more active again, or was it funding? I mean, can you help us understand this leap between Q4 and Q1?

Thank you, Rosman, for the question. No. These are not customers that have become more active. No. This is our penetration in the customer base. Without that, we wouldn't have so much traction. Even though we could have new investment groups, new processes, I mean, if you don't have the right level of origination, if you don't have a good penetration level in the customer base, then it's more difficult to sell. For us, we see growth in sales, and that is the plan we have, growing with quality -- growing with quality in credit lines, quality of our credit models, quality of our credit policies, whether you're talking about automated loan approvals or otherwise. I mean, we have our criteria to make loan decisions. So when we prepared our budget for 2025, that was back in October or November 2024. So by then, we looked at 2025. We prepared the guidance. We had a discussion about volatility on the Brazilian market. We also had a discussion about changes in the U.S. market, a higher interest rate. So then the market NII could have been a bit a bit lower. But so then in October, November last year, we made a decision not to stop our transformation initiative because we believe in the short term and also in the long term. And, yes, we had a few good surprises. First, productivity gain with our technology squads. Rosman, we expected that already, but it was better than expected. So these deliveries are extremely relevant because sometimes it is not a new application. But we continue to have developments in in the company. We're reviewing our KPIs so that we can monitor each business very closely. We have reviewed our legacy systems, which would provide an experience to customers, which was not the best. But as we modernize that, that brings benefits for the future. But, again, we realized that we have a lot of traction. We have a high penetration in different customer bases, and we still see a potential for growth in secured loans. That is loans that are fully collateralized. I said that already, and I'll repeat now. Please have a look at the collaterals provided by FGI and FGO. This is public information. And so you will see last year in both of these lines, I mentioned that we ranked second with a share of approximately 18%, 18.3% or 18.4% of an overall origination of BRL89 billion. So I suggest you will check these two lines, FGI and FGO, because you will see that we have a lot of traction. In our Bradesco Expresso, and I didn't mention it today, but Bradesco Expresso has almost 300 islands. That's different from the traditional points of sale organization. Now we have these islands but the level of productivity is much higher. In these two platforms we've delivered, the growth is more than a % compared to the traditional channel, and you can see that in our press release. So what is good is that we continue to have a lot of traction in the loan book. We had a more defensive position in terms of growth, but we could see we have a big potential to continue to grow, and we will go for it with the right ratings, with the right collaterals for both individuals and small companies, another very good line of business. But you see, this is not casual. This is because we made the right investments in the loan book, in commercial initiatives. We've expanded our investment bank team. And then what happened? Well, the pipeline grew. And, also, fee income grew more than 70% year-over-year, right, in in the first quarter. So, yes, we had a few good surprises, but based on the hard work we've been we've been doing. Right, Andre, Cassiano? I'm not sure you would like to add. Yes. Well, I agree with you, but it's always about people. It's always about our team. Look at the level of engagement. That's really important. You know? Look at the new model of our culture that can engage our leaders, that can engage our associates, and the determination of our salesforce now in in this transformation. I mean, we've had four great balance sheets. And so we have to continue on this path because we truly believe in the value of our franchise, the value of our brand. Yes. That's important. I agree with what Cassiano said. The level of engagement I have recently last week, I went to Miami, and we have a transformation initiative in the, BAC very much connected to our private bank and the principal segment because that's all part of our value proposition for high worth individuals offshore, and we now have 150 associates in the U.S. We had a town hall where we could see a high level of engagement, everyone working on this transformation initiative. I also went to Fortaleza. I spoke to customers. I went to Belem. I went to Hebron Agricultural Trade Show, and I could see a very high level of engagement. I have to thank you because I can see our leaders are highly engaged and our teams throughout Brazil, right, Andre, in all segments in technology and support, a very high level of engagement, Rosman. That's why we make it happen. I feel this is a bright moment for the organization. Everyone knows what to do. We know where we want to go, and there's a strong belief and a high engagement. That's why we are delivering more earnings. Thank you for the question. Thank you, Rosman.

The next question comes from Enrique Navarro from Santander. Enrique?

Hello. Good morning, everyone. Noronha, congratulations on the earnings. My question is about capital. In the last few months, we've received a number of questions about Bradesco Capital. I'm sure you've also received questions about this. Actually, two questions. The quality of common equity, the quality of the capital, and the other question from investors is that in a new moment of growth, maybe Bradesco will be more fragile in terms of capital compared to other competitors. From everything we heard, we could see that in the first quarter, Bradesco is at a higher level of income with quality, and that should continue in the second and third quarters, maybe not with an expansion but with stability. But then in the second half of the year, we may have tailwinds. And then so maybe Bradesco will have another leap in terms of quality and income. But now do you have the right capital structure to face a growing demand that may happen in 2026 in in Brazil? So I'd like to hear from you because this has been a frequent question from investors. But now, of course, looking at the great results that you are presenting, this concern is not so present. But I'd like to hear a bit more from you. Thank you.

Thank you for the question. I think Cassiano can answer your question. But let me tell you, I would love to have a problem of, you know, having to face such a relevant growth because the fact is that we feel very comfortable looking at the plans we have. In terms of capital structure, I mean but we're growing our revenue so quickly that that maybe we have questions about the capital structure, which we don't, really

Well, we started a project last year with a firm belief, and we cannot forget that. The project, you know, when we were in 2024 and looking at 2025, we would have a better cost of capital. And this is very relevant, and it makes us feel optimistic to continue following our plan step by step. So the plan has four years -- four important years. And the level of capital is at the level we planned, and that's important. If you look at the level of Bradesco Capital historically, this is the level, you know, working with the dividends, paying out the dividends to our investors as we've historically done. So there's no deviation from our plan. So in 2025 and '26, Navarro, we want to continue to be very close to this new market and be even stronger and attractive for customers. Our customers have not left us. We continue to work with the bankers' share. But we feel very comfortable when we think about 2026. And we all hope you're right so that Brazil will truly grow macroeconomically in 2026, and we feel we have a comfortable level of capital. As Marcelo said, this could be a good problem. Right? But our capital will continue to grow. Yes. He also spoke about tax credits. Yes. Of course, if we have a higher income, that helps in everything because our main capital comes from the net income. Or maybe a specific capital call, but we don't see that in the horizon. Now in terms of tax credit, the higher the NII, then the more we can use our tax credit, and we'll continue to do that. That's also included in our four-year plan. Thank you, Navarro.

Let me also add. So we are talking about a growing capital in the first quarter when many questioned whether we could do that. And the main source of this growth was the net income. So and in 2026, we may have a higher number, but also in 2025, continuing to follow our plan step by step and generating more net income. So that's going to help us. We will continue to pay out our dividends, and the level of capital shall remain stable until year end. We are not really concerned about that. Thank you, Navarro.

Next question from Eduardo Nishio with Genial.

Good morning, everyone. Congratulations on the results. My question is more linked to retail. According to you, this is still the detractor of profitability. So how are you executing the strategy, unifying the brands, systems, the timing for launch. For the launch I have basically four verticals to work with, Classic, Next and DigiU and Bits. So if you could talk about your expectations regarding profitability, growth, and with this focus on digital transformation in mass retail. If you can comment on the size of your network. At the beginning of the year, you said that you intended to reduce points of service by 1,000. You did 222 in Q1 alone. So perhaps you could speak a little about that linked to costs and the size of your workforce. Because in terms of headcount, the headcount has not changed a lot. So if you could speak about these two perspectives, network cost and mass retail. Thank you very much.

I'll ask Cassiano to start answering. But I before that, Nishio, thank you for the question. Thank you for joining us in this call. And you spoke about different brands, and you're talking about Next and DigiU. So bits well, bits is something that was absorbed. It does not exist as a business unit any longer. So it was absorbed. But DigiU, DigiU is a separate unit. It continues to operate. But we'll speak later about the movement for next over time. And, Cassiano, you can comment on retail, mass retail. A - Cassiano Ricardo Scarpelli Thank you, Nishio. Good to see you here. Well, I think an important part, throughout the year, we'll be bringing a new value proposition for the mass retail. That's a value proposition. We'll touch these three brands that you mentioned. So this will be important in the future. Marcelo and I will be communicating this value proposition to the market, and we'll be speaking to you about this. It will be an interesting one. So I think that that is the take home message. This is clear to us and this is added to our cost to serve, which is one of the main points of action in retail. The cost to serve these 30 million clients are very good clients, but we have to adapt them to the best cost to serve. So this will entail some adjustments. On the other hand, the footprint adjustment is linked to this. Adjusting the footprint is fully linked to the way in which we will serve the mass retail tale in a more digital way, in a user-friendly way, in almost a tailor-made way to serve. So this is our vocation. We have a reduction of the footprint, but this is going to be done carefully and cautiously, testing possible attrition because we'll spread all over this continental country that Brazil is. So we cannot lose our presence there. So this is important. We are growing clients even closing 1,400 branches because we have Bradesco, Espresso that is very strong in the front line, 30,000 offices of Bradesco Express, almost 39,000 banking correspondents. So we have to make all of these connections. Bradesco Expresso, reduction of the footprint, bringing clients to a new value proposition in digital retail. With this, we will rebuild our profitability because this is the detractor segment in the sector of our ROAE. So that's why it is important to move in that direction. In regarding costs, it is important to look at the efficiency ratio. Our efficiency ratio was 49.7% in Q1. This year, we shouldn't expect a significant change from that level because there is a lot of investments to be made in the transformation plan. But we should see more significant reduction in the efficiency ratio starting in 2026, moving towards 40% which is our ambition by 2028. So the impact will happen starting in 2026.

Next question from Yuri Fernandes from JPMorgan.

Thank you, Andre. Well, congratulations to all of you. Noronha, Ivan, Casiano, congratulations on the earnings because they were really strong. I would like to explore a point that you kind of touched on, Noronha. I'm talking about NIM and Joe's spread that increased 20 bps, and that was a very good result. And I think that the message is that it should continue to expand. I'd like to understand the order of magnitude that you're seeing because in this quarter, you had some help from funding. It helps, but I don't know whether this should be helping in the coming quarters. And my question is about the mix. Noronha, you said it over and over that the bank is growing, that there is risk appetite but following safer lines FGO, FGI, Pronamp. So I don't understand, should this margin remain at the same level we saw in this quarter? Will it expand a little less or perhaps a little more? I just want to think about the spread. NII NIM?

You can start, Andre. Yuri, I think that there are two points to highlight here. First, the funding NII. In terms of positive contribution from funding NII in Q1 will increase over time along 2025. This is a cumulative process of efficiency gains in managing clients' resources. And this is underway in the bank at an accelerated pace. So this should contribute even more in the coming quarters. The benefit is not done. There will be additional benefits to be captured. And we are seeing in this happen in Q2. The expectation is that it will continue throughout the year. Second point, bringing the focus to the macro economy. When we have a monetary tightening, normally, there's increasing the spreads. It's not that the banks aim to increase the spreads, but we look at the RAR of the operations. The bank wants to have NIA and other provisions. And the spreads tend to widen when we have moments of monetary tightening, and this is what's happening in the Brazilian economy. This will be another driver that will help us increase BRL8.6 billion towards the end of the year. I don't want to give you a specific target, but what I can tell you is that there is an upward trend.

Andre, let me add to what you said. Thank you for the question, Yuri. We had a cost of funding that was the lowest that we saw in recent years, and this is a fact. And Andre mentioned this. The biggest dry ever came from the growth of assets. And from the growth of our relationship with micro, small, medium sized enterprises because here we have better margins, a better NII. We reduced the loan book of the wholesale bank. So if you look at the complete publication, there is the TVM line item. Year-over-year, first quarter 2025 over first quarter 2024, there was BRL7 billion drop in TVM, in securities actually. TVMs are the securities. So I'm convinced of what we are doing with individuals and micro and SMEs. That's where the biggest opportunities lie. One of the colleagues asked about growth and drivers. And what I see, Yuri, is that will continue to grow, mainly our NII. The NII is growing steadily. If you look at the bar chart that I showed, it's there. It's piling up. We are offering loans with guarantees, collateralized, longer maturities with a very high RAR and very low losses. So we see NII growing and NII net of provisions also growing. And I guess that this is the main point explaining this growth, not just of NIM, but I would like to stress NII.

The next question comes from Carlos Gomez-Lopez from HSBC. Carlos, the floor is yours.

Thank you, Andre. And congratulations to all for the results and for the market reaction. So two specific questions. One is long term in terms of credit cost in the corporate sector, in the [Indecipherable]. We have had record low cost of credit, I would say, since COVID. It has never quite increased. At some point, the bank was guiding for higher provisions from that, but they have never quite materialized. Do you think that even with these higher interest rates, we should continue to have this benign scenario of credit cost again in the corporate segment in the coming years? And my second question refers to insurance again, following up on Mario's question. Health insurance has given you BRL900 million this quarter. That's about three times as much as it has typically given you. What has changed there, and how sustainable is that for the coming quarters and years? Thank you.

Would you like to start? Alright. Carlos, I will begin to answer your second question about health care insurance. What we've noted, as Marcelo mentioned, is a lower claim rate. But that lower claim rate is the consequence of many years of investment plans. And after the COVID pandemic, we see a more normal curve in terms of the claim rate. These two factors are helping us push down the claim rate in the health insurance product, and we expect that to continue. And that's very relevant. Also, as Marcelo mentioned, in health care, we have our strategy in terms of Atlantica d'Or, and that will bring benefits in the midterm or in the long term. But the new hospitals, we've had incredible benefits, a high level of occupation, and they already bring benefits to our earnings. So that's a promising kind of investment. Maybe not now, but more in the mid and long term. So that is a very healthy movement.

Carlos, look, about the cost of risk, your rate, the margins are tight. We had funds stepping out from variable income and even multi market. They're they are moving to fixed income securities. And that's what we see. So regardless of the corporate ratings, but especially companies that have a higher credit rating, they are being able to obtain funding much at a much lower cost. So this is a very favorable moment. So that's why I spoke about our origination strategy. I'm looking at low cap with a small share, but then I can work on the secondary market on over the counter, and there is a big demand. So while we have high interest rates and a weaker capital market with more volatility and without new money coming into Brazilian funds, that is funds in BRL, towards variable income securities. We will continue to see the same, circumstances. Maybe further on, maybe closer to year end 2025, when the Monetary Committee begins to plan for 2027 and the interest rate would be around 15%, 14.75%, I mean, where is the center of the inflation? What is the inflation target? We may see our inflation very close to the inflation target. Right? So that's what we expect. As you see interest rates coming down, you see more expectations in the variable income market, in the equity market. That would be later on in 2026 or in the beginning of 2027. That's when we expect to see a change. Maybe you'd like to add.

Yes. I'd like to add two, comments. Bank credit for large corporations and the capital market as a funding source for these large companies. Because the margins are lower, then you can see a higher demand for loans by large corporations. And at the same time, this helps improve the quality of our loans because large corporations, they have different sources of funding. Today, we see a high level of liquidity for large corporations. So that helps us keep delinquency down. As the economy grows slower, there that will be a risk to be closely monitored. And the quicker the interest rate begins to fall, then the better will be the outlook. Right. And it is important to remember that if you look at the largest Brazilian companies, Brazil has more than 400 companies in the open market listed in the stock exchange. Most of them have the right level of leverage. Of course, with a high cost of funding, that is pressure for the EBITDA margin, you know, to pay for the debt or for liability management. However, we all know that looking at this group of large corporations, some are in a more complicated situation, but that's not true for most of the large Brazilian corporations. So looking at that, I expect we will not have any surprises in terms of delinquency because that's more concentrated in the middle market and in specific industries, not really in large corporations. Yes. That's what I was going to say.

Our next question comes from Bernardo Guttmann - XP Investimentos. Bernardo?

Hello. Good afternoon. Noronha, Andre, Cassiano, thank you for taking my questions. Congratulations on your deliveries. Now looking at the NII improvement, that comes from higher efficiency in the bank's funding strategy. I'd like to hear more about your funding strategy in retail. Do you expect to continue to improve? What about the marginal cost of funding considering the current level of the interest rate and the concern about liabilities? We see a few neo banks that are more aggressive, more active in this. Well, we'd like to hear more from you about that, please.

Thank you, Bernardo. What I usually say is that here, we're always looking at liquidity management, trying to reach the best level of cash. And so you see, we now have a 136%. And so that has helped us reduce our cost of funding. And here, two levers are important. Our customers are closer to us. We have more principality in the relationship, not only in low income but also mid income and high-income customers. And so that helps us keep the cost of funding down. And the second lever, which is also relevant, is how we compensate customers when they bring, deposits -- when they bring demand deposits to us. We have improved the way we compensate these customers, and that has been very helpful. Now when Marcelo spoke about the whole year, this is something that we are doing in our cash management in the middle market that has made us become -- that has made us gain in terms of principality. So now we no longer need higher cost funding. So when I have a plan and I can execute the plan, engaging results and keeping a balance in terms of lower funding cost from small companies and even from lower income individuals, that certainly helps us reach this optimum cost of funding. Will this last forever? Well, I don't believe anything will last forever. However, we still have our plan, which we are executing step by step. The more principality we have in our customer base, then the easier it will be for us to keep this balance. And this year, I believe we will be able to maintain this optimum level of cash and funding. Right? We have increased our origination also at BRAM in the asset management. Our BRAM has grown very healthily in this, last year, you know, in our BRAMB, the asset management. And that's because of our strategy. Right? And so we trend towards the optimum level of cash, and the liability level is possibly the lowest in the last few years because of this strategy. And at the same time, we are harvesting benefits from a few investments. We see there is a demand on the market. So we have maybe our lowest historical cost. So thank you, Bernardo. Thank you for the question.

Next question from Renato Meloni with Autonomous.

Hello, good afternoon. Congratulations on the results and thank you for taking my questions. I would like to focus on client NII and focus on this message of being conservative. At the same time, you're growing more than the industry and with a reasonably high yield. I know we spoke a lot about loans with guarantees, the payroll deductible loan, but that's a segment which is the most competitive. And your CTC is also growing. So I'd like to understand, perhaps you found a niche which is being underserved by the other banks and that's where you're growing? In the beginning, you said that these are not new clients. You are just using your network. And looking forward, can you continue to grow with the current mix or would you need to get into more risk lines to continue to expand your NIM?

Thank you very much. But I can answer that quite objectively. In personal loans, we had some movements that were interesting. For example, with higher net worth clients. They normally get personal loans but with lower rates. Because if I offer conventional rates, I will do an adverse selection. And these higher income clients and have the payroll with us and they ask for a loan, they have a good credit rating. So that's number one. And regarding payroll deductible loans, part of that personal loan line item and I mentioned that in the presentation, you might remember that. A part of that is a loan which is guaranteed by FTTS. If I included that in payroll deductible loan instead of seeing a BRL5 billion increase year-over-year, perhaps we would see an increase of BRL10 billion to BRL11 billion considering FTTS and the other set of payroll deductible loans, which means that we are quite well tractioned in the INSS deductible loan. And while we also have a great penetration, we are big payers of INSS. We have a high capability of distribution. So there's distribution, which is done by competitors, not just digitally, but also using external distribution. We access that, but the bulk of our distribution is done through our own channels, our digital channels, other channels that we use, the ATMs themselves, and also in our service units -- our points of service. So we have a great distribution of payroll deductible loans. So I don't see the bank entering into riskier lines because we have great opportunities. And I mentioned micro and small and midsize enterprises. Look at this. Last year, the set of origination of alliance FGO, FGI was about BRL89 billion, and that continues to have traction. And we have penetration here, but in order to have penetration, you have to have a client base, and you have to have an ability to deliver. And we do have that. This is what we're showing. So I don't see riskier lines in the horizon. I might offer more personal loans in the prime segment. Yes. It's possible as long as the pricing is adequate, if we have the right risk adjusted return. And this is our target. This is the way to go. And I stress what I've said before. This is an important focus for us. It is the quality of our assets. We don't give that up. We prefer to advance more slowly towards the future than moving in the future too quickly and making mistakes.

Comes from Tito Labarta from Goldman Sachs. Tito? We cannot hear you. It's on mute.

Yes, sorry about that. Thank you. Thanks, Andre. Hi, Marcelo, Cassiano, thank you for the call and taking my question. And congratulations on the strong results and the stock reaction. Just one final question, I guess, on my end. Just I saw John Deere contributed BRL17 billion to your loan book. Did that contribute at all to the earnings, particularly, I guess, on the client NII? Just did you see any benefit from that? And just to think going forward, the if you see any contribution from John Deere in terms of the business, the potential improvements in profitability, just to quantify if that had any impact in the quarter and expectations for the year? Thank you.

John Deere was much more important strategically with a stronger share in the agribusiness. The BRL17.3 billion that was added to our portfolio at the very end of Q1 is broken down to individuals, legal entities. Without that, our portfolio would have grown 11% in Q1 2025 year-on-year. But the contribution to the net income is very close to zero. It's actually immaterial, and that's why we didn't highlight that. If you consider that we have a cash outlay with the with the cash not being remunerated, that contribution becomes even less important to our net income. So for that criterion, we shouldn't be thinking so much about John Deere. I think that John Deere will come much later. And this is a moment when we are discussing the strategy of including John Deere in our operation and how we can work better together to better serve the agribusiness industry, which is very strategic with a good outlook and an industry that is very resilient to the macroeconomic scenario. So the strategy is much more important right now than any contribution to the net income or client NII or any other line item. Thank you, Tito.

Thank you. So we are now closing our Q&A session. I want to thank you all for contributing with your questions. Before I give the floor back to Marcelo, let me tell you the questions that we did not have time to answer will be answered by our IR team, and the press release is available on our website. Marcelo, your final comments?

Thank you, Andre. Thank you, Cassiano. I want to thank you all who've joined us this morning for this earnings call, the earnings of the first quarter of 2025. I am certain we will continue to work hard to deliver more and better during the year. Thank you all for your time. Have a great day.

[Operator Closing Remarks]

Hello. Good morning. I am Marcelo Noronha. I'm here live from Cidade de Deus to present the results for the Fourth Quarter of 2024 of Bradesco. And certainly this also contemplates the full year results for 2024. I would like to say that we will split our presentation in three parts with three initial messages for all of you. First, the results for the fourth quarter reinstate our profitability improvement, just the same way as I presented a year ago here when we presented the plan in the same month of last year when we started our growth plan and I showed you what was going to happen step-by-step, quarter-on-quarter. The second message is that our guidance for 2025 is a more cautious guidance in terms of risk appetite, and this also includes the effects of 4,966 and higher stake at Cielo. And it is cautious vis-a-vis the macro scenario and at the same time it's very optimistic in terms of what we are delivering and what we are currently doing. And also there is our transformation plan. So it is my duty to present to you a small summary of what we did in 2024. We continue to expedite our transformation and we made a decision based on a better macro scenario, more cautious scenario. We decided to invest in our transformation without stopping anything else. Because here we have efficiency gains, increase of the activities and everything else that we are about to see. Now, it's precisely 10:32, I will start our presentation with the results that have been posted earlier on this morning. Our net income was BRL5.4 billion growth of 37% and BRL19.6 billion in 2024, meaning 20% growth. And how did we achieve this net income and this result? This net income was boosted by our revenues mostly, but also due to the fact that we are very cautious with our expenses despite the investments we've made. So now I'll show you our position and our status in terms of credit, fee income, the insurance company and so on and so forth. I have here some highlights. These are operating highlights and this summarizes our balance sheet. But before I begin, I'd like to say that our recurring net income allowed us to make a non-recurring provision and the net effect is about BRL440 million. And this is precisely because we wanted to boost our footprint review for 2025. So what are the highlights? Well, our total loan portfolio grew, and despite the review of our footprint in a 1,233 points way beyond what we anticipated our customer base grew by more than 2 million clients, 99% of our transactions are occurring through the digital channels. That was the case in 2024. And this helps us throughout our transformation in terms of the cost to search, I would like to highlight our Bradesco Expresso platform. Last year we delivered two new platforms and the outcome of that was better customer experience. A better customer experience of those clients that use Bradesco Expresso. And secondly, there was also an improved experience from our correspondents. And this is the outcome. We grew payroll, we increase 49% insurance sales, we also increase our base of correspondents by almost a 1,000 reaching 39,100 bank correspondents. Our BRAM grew AUM assets under management reaching BRL122 billion. We were the recipient of two awards by Infomoney. We are the best provide the best customer experience in our business process. This is what I said in terms of the wholesale and retail bank. I already talked about our net income and transformation is occurring at a very accelerated pace. So I'll elaborate more on that. And we also had two inorganic events. We concluded the closing of Cielo's capital. And we also had the acquisition of 50% of John Deere after we got the approval from the Central Bank and CADE. And this is a picture of our Bradesco Expresso aisle. And this is just a picture I have for you because this is another test that we are testing new models with our Bradesco Expresso. And this is occurring in several different municipalities of the country. And then we go to total revenue, which boosted the growth of our net income. Our revenue was over BRL32 billion, we grew 7.9% year-on-year in almost all lines of revenues. NII was up by 5.4% year-on-year, fee and commissions income grew by 7.9% year-on-year. And our insurance companies grew more than 16%, 16.6% year-on-year with a recurring net income that was quite relevant in another full quarter. So from the third quarter our total revenue was BRL30.6 billion, reaching BRL32.3 billion, growing by 5.4% in the quarter in terms of revenues. And this is happening thanks to the traction we have the bank in all of our business lines and associated companies. Another important lever that boosts revenue even in a presentation. I think we should do the opposite. We should start with the leverages and then arrive at the final number. But we started with the net income. So our total loan portfolio reach more than BRL980 billion, growing almost 12% year-on-year. And the average daily production posted impressive growth. I highlighted here the growth of individuals with 13.3% and I will give you more details in a few moments of some of the lines. And also we grew micro, small, and medium sized companies and this portfolio grew 28% during the period. And the highlight goes not only to middle market, but also small business. And I will elaborate further on the risk part of it. So if we break down the portfolio, we see here individuals on the left hand side, companies incorporated on the right hand side. If you look at all the segments in every period, very seldom we will find a period with no growth. And now I would like to draw your attention to a few items that matter to us in the case of credit cards. Our year-on-year growth was 5.1%. But the major growth lever to reach that 5% was high income, because high income posted growth of 14.5%. So I would like to highlight how cautious we are in terms of risk adjusted returns. And we were very mindful in terms of the quality and generation of our assets with new credit models, new policies, and also process organization. And our payroll loans grew by 5.8%. It could have grown more with the cap, this doesn't help, but I would like to say that anyhow our traction is quite relevant in this regard. Both banks that have government control, they are market leaders in payroll deductible loans with 15% or 20% market share. But being a private bank, Bradesco has 14.3% of share in payroll deductible loans for public and private. Payroll deductible loans. On the right hand side we have corporate or companies. We are not growing 28% in high risk portfolio. We have our feet on the ground. So if we look at the total publication, you look at our working capital, we went from BRL130 billion to BRL147 billion. And this is precisely, this coincides with our generation of FGI, FGO, Pronampe both in middle market and also small business. In middle business we are growing slightly above that. This is a combined growth. But in terms of small size companies, our growth reached almost 20%, when it comes to companies. We are very careful in terms of our growth, real estate loan and collateralized loans and in large corporate we are using our origination for distribution portfolio optimizing our capital and our return from clients. So all of these are good news. And if you allow me to say, we need three combinations in order to deliver members like that. The first combination is having a very sound customer base in all customers segment. And high penetration in the base. If we didn't have that, we wouldn't be able to deliver it. And secondly, commercial traction with a very well-orchestrated process in the physical and the digital world. And the third pillar is our credit business unit. It brought us new credit models with a lot of machine learning, improving every day, measuring our risk appetite and our portfolio pricing so that we have the right numbers for every segment and every audience. This has to be very well tuned because if we are totally integrated, we can certainly deliver what we are delivering today with portfolios with controlled risk. Well, here I have another piece of information and that is that we certainly regulate our risk appetite the entire time. And when we saw that we were heading towards a more regulated policy, we look at that in the fourth quarter. We're not thinking about 2025, but we did that beforehand. In this other chart down below shows that 54% of our portfolio is secure in a very dynamic way. We are looking at several other periods, but I'm talking about the portfolio. If we were to show the production or everything that is coming in, this KPI would be much higher. And this really shows the quality of what we are delivering in our margins. And that's why we are not delivering very high margin. We are delivering controlled portfolios. But even then, every quarter we posted growth in absolute terms in terms of client NII. Our NII was 5.4% year-on-year. I can comment on the guidance later on. Our market NII was BRL440 million this quarter. I would like to highlight trading, but the good operation of our treasury team is responsible for that. And then we have the growth of client NII. And this is reflected in this item that we've been talking to you about, which is the client NII net of provisions, which has to do with the bottom line and this impact in our growth of BRL8.7 billion, 77% year-on-year. And when we look at entire year, almost 26%, 25.8%. And we continue on the same pace envisioning growth despite a more cautious scenario. So the message here is that we continue to control our portfolios. We are reducing over 90 delinquencies with a very good coverage ratio in all of the KPIs, all of the indicators, expanded loan loss provisions. I would like to draw your attention that in this fourth quarter was BRL7.5 billion, I mean, increasing by BRL400 million, but the same cost of credit that we are indicating of 3%. And certainly here again you can look at mass market. And this is due to everything I told you before. I mean controlled portfolio, and we are investing in clients that give us an adequate RAR. And I can also give you more details later on about some aspects related to product insure. Another important item has to do with our fee and commissions income. Why is it growing? It grows because of traction, because of the level of activities that we have in the entire organization. BRL10.3 billion year-on-year, 13.7% and 7.6% and these numbers do not consider that additional share from Cielo that we acquired. But here you can maybe draw the same conclusion. We are growing in all aspects and in almost all the periods, as you can tell from the slide. But this is certainly a consequence from the high activity that we are involved. But now here I'm bringing that number that I mentioned at the beginning. When we reviewed our footprint. We did we went way beyond our expectations with 1,385 I would say reviews and the ending of some POSs, but even then we were able to grow our customer base by over 2 million customers. Year-on-year expenses is here. But we have to do some important reconciliations. Well, if I remove like in fee income, the additional share from Cielo, this growth would reach 7.5% year-on-year and 8.1% for the entire period for the entire year. But let's look at another indicator that we have here. I think I've been bringing this for the last three quarters. The total number of expenses, the total amount of expenses of 9.3%. But once we exclude Elopar and Cielo from this number, the growth was 6.9%. I mean, Cielo is delivering new solutions and this will allow us to increase our share at SMEs and large corporate Livelo, Alelo and the Elo banner. We are investing to grow the business even with very good returns. However, we do not have the daily management operation. I mean, we are improving investments and expenses. So when we exclude that expenses, we are absolutely under control, as you can tell from these other indicators. And I would like to remind you of two other details. Number one, we are in this transformation path, which is very robust with a lot of CapEx investment, but there's also OpEx as part of the story. And second of all, not only we're doing that, I mean, we're making things happen, but the insurance company is also investing in CapEx and OpEx and this helps these areas of the bank to grow as well. Therefore, my conclusion is that all of our expenses are under control in all of the lines that we can look at. And now looking at the consolidated numbers, there is one or two deviations. But we can talk about that when we talk about the guidance. Now I'm talking about the insurance business. Another quarter of good results. If you look at total revenue, BRL121 billion. That's why we posted 13.6% growth. Net income was BRL2.5 billion, BRL9.1 billion in the year with an ROAE of 21%. So the insurance business is well in track. When we look at the insurance operation in the guidance, we see the performance quarter-on-quarter posting growth. And I would like to draw your attention to technical provisions that went beyond BRL400 billion with almost 12% growth. And the same thing goes for the insurance company, meaning that the insurance business is well in track with distribution in different lines in all of our customer segments inside the bank and also in our external channels which are operated by the insurance. We had a capital index. We have a mark-to-market. We ended the year of 2024 with 12.4%. And the trend of the year January 1st, we applied 4,966, achieving 12.8% capital, already considering the 20 basis points required by the Central Bank for the system in operating risk. Here we have dividends in IOC and their dynamic. In 2024, we see the number and I'd like to remind you we have a share buyback program which is open and it will stretch until May 7th of 2025. And as part of the program, we had a buyback of about 50 million shares. And we announced we are going to have the cancellation of these stock close to 1% of the bank just for your information. Here we have the guidance for 2024 and we started giving you this complementary information of NII net of provisions almost like an informal guidance. It increased to BRL34 billion. And that's what matters. It's the bottom line, instead of us discussing where I make more of a margin and where I make less of a margin. So here we have total NII minus the cost of risk. And we had a good delivery. In NII net of provisions, we did very well. Expanded loan loss provisions close to the top of the guidance. Fee and commission income close to the top of the guidance. Operating expenses close to the top of the guidance. But with this observations I made regarding consolidations that we have and the result of the insurance operation, just like we said, close to the top of the guidance 7.5%. So now we'll talk about a quick balance about our transformation. I'll try to be brief. Of course, I cannot mention all of the indicators because we have a lot of information. Among the initiatives, I would like to have the organizational highlights. You will remember we reduced layers, reduced span of control. We hired C-levels, made some changes in the leadership team. We put together a transformation office with 800 people or more and it's doing really well. Management culture, we have been working in management and culture. We did some surveys with high level of engagement. And we launched some messages together with our team which is what we want to see in our day-to-day in our business model and management model. So we are talking about much more contemporary management. We have so Bradesco, I am Bradesco. We are here for clients. We are much more focused on in clients with all of the transformation we had in products, adjusting, modifying these departments in the organization. We have an empowered team with the processes of enterprise agility. We have been decentralizing decisions, making our team effectively participate and decide fast so that we have a faster time to market and faster deliverables. We are challenge-oriented. What does this mean? The best example is the transformation. How bold we are to put together this kind of large plan billionaire, a billionaire plan and we are touching all points of the organization. This is a big challenge. But we are short of our deliveries because we have a lot of deliveries already of the several initiatives we've adopted. Digital Retail Service Model Evolution. We delivered a new experience in all segments in our app with increased NPS and you can see that we are following and we will deliver a totally new experience not just for the segment, but for all segments. You will see this. There will be more news along the year. But here in this set of clients we have been working with our GenAI BIA with 90% resolution. I will speak more about this when I talk about technology.So I'll come back to this, okay. Bear with me. So we have BIA with AI and we have a decision tree which is transactional. It is working really well. But now we're implementing GenAI BIA. We have better NBO models with intensive AI use and hyper-personalization with the consequences you can see at the bottom. And we will show you this year because we're already delivering this value proposition. But we are going to show the market what we're building here, what we are delivering. Some other highlights the principle launched in November '24. We have about 50,000 clients and we are starting to expand in payments and synergies, new cash management products and the synergy with Cielo again. Cielo has been investing. So we have the deliverable tap on phone. And up here some important highlights for SMEs. We launched this segment after we presented our plan with 122 branches dedicated to enterprises. We ended the year with 150. We are growing really well. We have big traction here. Middle corporate is doing really well. We have more platforms and more RMs. And the consequences, the increase of market share gain. In Wholesale, we also launched the Agro segment. So that we can take, so we can seize this opportunity with our John Deere bank, big partner. Our credit business unit has been making a huge difference for us with its implementation and with the creation of the portfolio management department. We have intensive use of conglomerate data, improving our modeling. We hired almost 200 professionals over the year. And we improved our credit policy and processes. We have intensive use of machine learning. And here in the red box, we have the consequences. The portfolio grew because we have commercial traction and penetration in our client base. Market share gain in SMEs and individuals over 90 default droppings. And with the new vintages of mass market with much better vintages compared to the pre-pandemic period. Okay. So, now let's speak a little about technology, about tech modernization. Here a team led by Francesco, the executive we hired with an active participation of his colleagues in the management. We have enterprise agility. We ended the year with more another 500 squads and we are scaling up in 2025. We have a dedicated team of more than 10,000 people. We are in a process of strong internalization with very senior people. We continue to migrate several applications to the cloud. That reached 79%. And I spoke about GenAI when I was speaking about digital mass market, right? Well, GenAI BIA. We have been testing with more than 40,000 internal employees, 580 clients using it. In the last few months of 2024, more than 2 million interactions happened with that level of resolution of 90%, as I mentioned. And now, we're going to improve this even further and we are going to scale it up, offering a completely new experience to clients. BIA Tech. It's called BIA Tech, but actually, it is an internal application we have with significant efficiency gain and productivity gain in developing the storage for every new or legacy application we have. So, basically, what's happening? BIA Tech is learning to adjust the stories. BIA does that instead of having humans doing that, it learns. There are some organizations that work really well with this, but BIA also writes the stories. We are one of the most pioneers in the world in the use of multi-agents with generative AI in order to modernize applications, legacy systems and to create models. So what does that mean? In two big models or modules that we are working, and we are working strongly on that. I have a squad which is multidisciplinary, 10 people, developers, UX, for example. So in the place of a developer, you're going to have an AI multi-agents for products for UX and so on and so forth with an ability to scale up significantly our business and to expedite our process of delivering systems and modernization of systems. We acquired 100% of Kunumi. Kunumi is a company from Minas, linked to the academia with more than 50 PhDs. The differentiated team. They have been working a lot to solve problems for problem solving through machine learning, AI with the credit department, with the collection department, with data intelligence and other systems areas. And we gain 90% productivity in addition to the implementation of value assurance to improve our efficiency and to avoid wasting with contracts and duplications. And here we're going to look at the next steps coming to the end of the presentation. In terms of efficiency, we continue to review our footprint, as I mentioned, to evolve our culture. With Principle, we'll get to 500,000 clients in next year. We will complete the expansion with more than 800,000 clients in credit. We have all of these processes that we are investing in strongly. We will continue to internalize technology resources, accelerating enterprise agility. And with all this productivity gain coming from tech. As I mentioned, we are increasing tech deliveries and technical output in 2025 by 50% federal. This is very gratifying because we have this conviction and it is happening. We are very satisfied with what we are delivering. And here's the guidance for 2025. You probably saw in our earnings and in our material fact that we released today. We had a scenario of the favorable survey that would give us 9%, 10% of portfolio growth. But I told the sell side as well as the buy side in the past quarter, that we were working with two scenarios. One scenario that we considered a base scenario of 70% and a more cautious scenario with 30%. And that's what we are working with. We want to be cautious. Because we think that with a contraction as to monetary policy and with interest rates we have today, of course there is an economic impact. But our NII net of provisions is growing even more. Why is it growing more? Because we have the carryover for 2025 and the rest doesn't actually require a lot of comments regarding the rest of the guidance. Candidly speaking, I am very much optimistic regarding everything we are doing more and less optimistic about the macroeconomic scenario. But we might have surprises. I'm more optimistic in our guidance from the middle top than from the middle down. I can envision a more positive scenario. And this is a summary, we continue to grow profitability in a solid and safe way given mainly by revenues, given our traction, we continue to be -- to have a lot of traction in around the bank and we will accelerate the change of the bank. I'd like to thank you for your attention, for your time and I'd like now to invite you to the question-and-answer session. We have Andre Carvalho and Cassiano Scarpelli, whom you know, and we are here to start the Q&A.

Thank you, Marcelo. Thank you, Cassiano. It's a pleasure to be here with you. Good morning. I'd like to inform you that Ivan Gontijo, CEO of the Insurance Group, will be joining us remotely online. If you want to ask questions, you can ask questions in Portuguese or English. If you want to send a question, you can send your question to this email on the screen [email protected] or use a WhatsApp connection 11-974-43-8238 or point your camera to the QR code on the screen. First question from Bernardo Guttmann with XP Investimentos. Bernardo?

Good morning, Andre, Noronha, Cassiano. Thank you for taking my question. I have one question about the market NII had a good performance of your treasury department in Q4, again with arbitration as well. Any specific change in the hedge policy of the bank? How should we think about market NII dynamic for 2025 considering a high interest rate SELIC rate?

Thank you, Bernardo. I'll ask Cassiano to start answering your question and I'll make a comment.

Good morning, Bernardo. Good to see you and Happy New Year. Well, in this quarter, the surprise was the arbitration. The main gain was this. Although we don't have specific hedge operation of ALM, we do a lot of operations for hedging in some circumstances. But indeed, in this quarter Q4, arbitration was super important in some specific operations where we got good movement. I do now think that this is a traditional movement for next year, for 2025, actually. In 2025 we think we should be more cautious. We work with an NII close to neutrality.

Bernardo, I think there are some additional comments to make. In this guidance, we are being indeed more conservative, as Cassiano mentioned. But you see, in some months of 2024 we made money, as was the case of the last quarter with trading. Of course, this is also going to happen in 2025. You might say, oh, but if you gain six and lose six, there's neutrality. Yes. But the scenario might be a little better. We are on the cautious side. I can only have more positive expectations than worse expectations. And my second comment is that we have lessons learned. We have a good team, coordinated by Roberto Paris with Marina, Bruno and now Luis Felipe, who is responsible for trading. So I think that we might have an even better year. Thank you, Bernardo.

Next question from Gustavo Schroden from Citibank.

Good morning, Marcelo, Cassiano, Andrea, it's very nice to talk to you again. Congratulations on your transformation process. I think Marcelo in a very summarized way, conveyed a lot of it. But I would like to talk about the structure part of the bank that refers to capital. When we look at CET1 at 10.9%, slightly below the average among your peers and I understand that it's slightly above the minimum requirement, but we notice some reclassification and transformations that were made. There is an explanatory note that refers to a reclassification of securities available for sale to maintenance and held to maturity. And then when you look at the OCI line or other encompassing results, we see another quarter with negative results. I mean, accumulated losses that do not impact the result, but they do have an impact on the capital part. So, how comfortable the bank is, or what is the bank strategy to have that CET capital return to a higher level? And I just want to understand how comfortable you are vis-a-vis that capital. As you said yourself, Marcelo, your growth guidance is very conservative. It ranges from four to eight, but with a better macro landscape, maybe this portfolio growth range should be more up to the at the top of this range. So this is something interesting for us to hear from you.

Thank you, Gustavo. I would also ask my colleagues to comment as well. We are very comfortable with our capital. You saw that we now reach 12.8% after 4,966. The CET1 has a huge buffer because I think it goes up to 8%, if I'm not mistaken. The fact is we are not concerned with that. And we said that from the very beginning because we ran several projections, stress scenario, optimistic scenario. Therefore, we do have room to grow with stability in terms of our capital. Therefore, I have no concern at all in terms of everything that we can do. And we will continue to increase profitability and increase our net income and our CET will be higher with time.

Well, Gustavo, good morning. It's good to talk to you again. It's very important that we bear in mind that our guidance or our projection has to do with the two ends of the guidance. We are very comfortable in terms of our capital as a whole. I mean, you saw all of the moves. Basically, that reflects the adjustment of our balance sheet to the 4,966 we had 0.4 drop in the quarter to December 31, 2024, which is mark-to-market. And 4,966 on January 1st, brings that capital back to 2.8% meaning being 10.9% at the end of the year. And then that contemplates three important components. We have 0.7% related to adjustments to shareholders equity to adjust to the criteria from the central bank. They have the minimum regulatory aspects as part of the rule. And we are pretty much in line we just adjusted, made adjustments to the central bank and that was 0.27%. But as you know, that was split into four installments. The central bank released a regulation, so we have 0.07%, which is the negative impact. The other negative impact is 0.20%, which refers to operating result, this is the operating result that impacted now, and then on the other hand, we have reversal. But in practice that means the adjustment to the different types of mark-to-market in our balance sheet. I mean available for sale and negotiation levels. And a new criteria of business models. They are classified according to the business model of every security. So once you put everything together, we arrive at 12.8%, which is higher than 12.7% from the previous quarter. But even more than that, when we look at our projection, we look at all the possibilities of our net income. We have enough capital to fit into the range of our guidance. So in terms of capital, it will be stable this year, even with the full payment of IOC and growing the loan portfolio close to the ceiling of our guidance.

So next question is from Daniel Vaz from Safra.

Good morning, Andre. Good morning, Marcelo and Cassiano. And thank you for the opportunity of asking a question. I would like to revisit the guidance aspect because you said that you're being more conservative. In fact, when you look at the portfolio and when we highlight, I mean the NII net of provisions, maybe it doesn't grow so much when we look at the range. But you lower the comparison base when you look at 2024, but 2025 is more conservative at Pronampe and et cetera. So the spread should be lower. So according to our reading, that means that your provisions are probably lower. Is this the way we should look at it? Is there anything you would like to highlight in terms of provisions or whether it's not at the right level today or you think that provisions are more collateralized. So I just want to hear your comments. Thank you.

Thank you, Daniel. And thank you for your question. What I have to say is that we will continue to grow. Also our gross margin will grow as well. As I said, we have the carryover to 2025 of everything we produce. And we piled up, we accumulate it. But if you look at the cost of credit or the cost of risk, our expectation is to keep cost of risk around 3%. This is our expectation. We are very, very comfortable with everything we are doing in relation to credit. But then, if we look at the mixed composition in 2024, let me say the following. I talked about payroll deductible loan market share. If you look at growth on the individual side, we grew incredible loans. We have a higher share with 14.3% among private banks. But this also has to do with NII. And sometimes we don't even look at it. I'm not only referring to Bradesco, but our peers as well. I mean there was an INSS cap, but also in terms of the public companies throughout this period with the increase in interest rates and the long tail, the long curve every month we settle a lot of money that was hired in previous years, previous periods with twice as much margin. And then, you hire new payroll loans at a lower margin. And this puts pressure on the gross margin. But there is a good risk adjusted return or RAR. The second thing for individuals is credit card. We are with our feet in the ground. And the major growth lever came from high income individuals which grew 14.5% year-on-year and combined growth was 5%. The third aspect is that if you look at our publication and look at it in detail, you see that our personal loan also grew. But we grew in two very safe lines is not the most stress personal loan. The first is that we grew with higher income clients. We charge them lower rates. Otherwise the selection would be adverse. So it's a good risk on prime clients. They have specific needs. So the credit line is a bit elongated. And then we have other credit lines with FGTS, secured loans, but the margins are lower in 2024. But then when we look at corporate or companies, our growth is focused on collateralized portfolios, particularly based on programs like FGI where you take several different sizes of companies up to BRL300 million. FGO, FGO contemplates, I mean BRL400 million a year pro credit for companies up to BRL360 million a year. And then what happened here? Just to be totally transparent and you can look at the ranking. You can look at that periodically. I mean, in 2024 Bradesco had the highest traction. Therefore we grew around 70%. I'm talking about production. When compared to 2023, we grew BRL17 billion give or take. Once you combine all the programs and with FGI alone, we were the second largest producer of FGI in the Brazilian market. There was a bank that produced more than us until December 31st, 2024. I'm looking at the full year. On the other hand, when we look at FGO Pronampe pro credit, another organization was not that one was number one. And we came second, very close to number one. And then when we look at the global and total production here, Bradesco had 18.5% share of production in these programs. So the RA error is really phenomenal. And this is very good for clients and companies. It's a very good government program. They are managed in part by BNDES and Banco do Brasil with funds. There are several rules involved. So 18.5% of the production came from Bradesco. There is a bank that was slightly above us. And the third bank has about 5% lower share when compared to us in terms of production. Therefore, we also grew at SMEs, boosted by portfolios. There were secured and collateralized, especially this one, which has smaller spreads. Rural loans also collateralized and secured. Real estate loans or mortgage loans is collateralized and our NTV is about 52% -- 51%, 52%. Therefore, this is a given reality. And that's my conclusion. It will not reduce the spreads. I mean, I expect to see better margins with a control cost of credit. So when I look at the level of activity, because life is very dynamic. It's already in February, so the level of activity is here. I mean therefore I think that our guidance is very cautious because we are looking at the macro scenario. I mean the rates are high, more for companies than individuals. There are group of individuals that have a more difficult time to access credit. But the scenario is here. So I don't see drop in margins. All I see is growth. Thank you.

Daniel, in this guidance, it's already implicit that client NII grows more than the portfolio. The portfolio is end-to-end and client is just an average. So just with this average comparison already give us about 8% of growth for client NII that reaches two-digits once we add the efficiency measures and funding and the funding side. And on top of that, Marcelo just mentioned better spreads, that can also help us to increase client NII throughout 2025. So, yes, cost of risk is about 3%. And this is pretty much around what Marcelo just said. Thank you. Thank you, Daniel. Next question.

Next question by Thiago Batista with UBS.

Good morning. I have a question about the several digital channels or digital trends. Do you have a strategy to address these channels considering the new change the bank is adopting? And the follow-up about capital. Is the bank capital with 10.9% of core capital and is there any kind of restructuring or paying IOC or something like that is this in the radar of the bank when we look at the next 12 months to 18 months looking for it?

Thank you for the question. It is a pleasure to have you with us. Regarding the second topic, we are very comfortable. We don't have any movement in the insurance group in that regard. We see profitability increasing, stable capital, a good buffer. Regarding DGO, and next, very soon we'll bring you this new value proposition of our digital business. We should be integrating next in this new value proposition along the year of 2025 and until the beginning of the second half of the year. But, we'll bring you more on this, more details on this later. We have a strategy for that and we are in the process of executing it. And about capital, I answered about capital.

Thank you, Thiago. Next question from Renato Meloni with Autonomous. We cannot hear you.

Thank you for taking my questions. I'd like to go back to the NII, Marcelo. I'd like to reconcile this movement of moving towards safer portfolios while you're expanding NII. And in Q4, we saw a flat NII compared to the prior quarter. And I think that even if we consider the portfolio effect that you mentioned, there is implicit in NII increase. And if I may ask a quick second question? In the guidance and increase in expenses does not include restructuring costs. Is this a fair statement and can you give us an order of magnitude of what you expect for 2025?

Thank you, Renato. It's a pleasure to have you on board. First, regarding the 8.4% margin, well, in absolute terms we grow. I made a comment about the INSS and public payroll deductible loans. Every month we settle some. But we replenish that with higher margins. We might have a different index, 8.4%, 8.5%, 8.3%. But in absolute terms, we are growing with a cost of risk which is very stable, well-balanced. So we are very certain that we will continue to grow the margin. And I don't worry so much about the NII itself, the index itself, but I focus on absolute volume and it's constant growth and this is what we're going to deliver. So we have confidence that we'll deliver that. The restructuring cost this year. We made a provision to move forward with it and invest and to review our footprint. And I think that I mentioned in the past and our initial expectation for 2024 regarding our footprint review was of about 1,000 points of service, 750 closing agencies and the rest would be restructuring or renewal. And we had almost we had 1,385 even more in effect of BRL440 million approximately has an effect for us. So expenses compared to what we are doing, the transformation, well, it's much better in CapEx as well. So that's what I said, it's BRL1 billion plan. And the payments companies, I mentioned, are making important moves in CapEx and OpEx and the insurance group is also working on OpEx and CapEx. If we isolate net of the payments companies at 6.9%, so we continue to invest. We'll gain efficiency and productivity. And that's why we cannot stop working on the transformation of the bank. I have a lot of confidence in what we're doing. Many deliverables, productivity gain. One of them is we're going to deliver 50% more technology output than we had in 2024. So it is a lot of growth. Thank you, Renato.

Thank you, Renato. Next question from Mario Pierry with Bank of America.

Good morning. Congratulations on the results, Marcelo Noronha, my question is, well, listening to the results of all of the banks so far, everyone is focused on more cautious loan granting, more high income clients and products that are secured. So it seems that there's going to be intense competition in this segment and we see everyone very cautious with the mass market. So wouldn't this be a timely moment for you to grow your mass market given that everyone is being very cautious? Theoretically, you would have room to price this risk better. My question is, what would make you take on a little bit more risk and focus more on the mass market on retail? Thank you.

That's a good question. It's a provocative question. When I spoke about mass market and digital, we talked about 1 million clients. With this new value proposition, we are testing some models and we continue to intensify our penetration here. We grew 2 million clients, man. So, I mean, we are growing account holders. We are growing in different fronts. And I also mentioned some more information. With the new platforms, we gained a lot of efficiency, productivity and client experience with Bradesco Expresso. It's a correspondent bank. We grew more than 100% in granting payroll deductible loans. So, you see, we have a risk appetite. It's not that we're not working with mass market, we are, but we are choosing the risks adequetly because nothing can replace a good quality of assets. And this is something we will not give up. We will not give up on risk-adjusted return, RAR. But we are working in this market. I showed this with Expresso, showed that we increased by 45% of sales with those implementations in mass market for that set of clients. So we are increasing our penetration. But you see good risks and good modalities, payroll deductible loans and products that we can work with, that will bring us adequate risk for our organization. In our case, it's not that we are giving up and growing in our mass market and testing your model with Bradesco Expresso and even with digital, you will see deliverables we'll have this year. We'll be showing you. We didn't give up on that. But the risk appetite needs to be controlled. We need to have return. And this is what's on the table full-time.

I would like to highlight two improvements in risk management. First, we worked with volatility clusters. We have five volatility clusters. The moment we start adjusting risk appetite, we adjust mainly at the highest volatility cluster, the people who are more exposed to the deterioration of the macroeconomy. That's where we start adjusting and we started doing that. The second improvement has to do with repricing. Of course, higher-risk clients have higher spreads. Lower risk, lower spread. And that curve became slightly more tilted in the last few quarters. In other words, we're charging a little more spread where there is a little more risk. We adjusted our offerings and we have demand and we want to have a better priced risk. And risk is better priced in these segments. Mario, thank you for the question.

Next question from Pedro Leduc with Itau.

Good morning and thank you for this opportunity. My question relates to NII. In 2024, NII was below the guidance, of course, that gauged by loan loss provisions. But this has been the most challenging line. But when you look at a 2025 guidance, I mean, saying that, you're saying that it will grow above the portfolio. I would just like your help to -- help me understand it because you talked about the tail effects, but even the spreads of the industry for payroll loans and real estate and mortgage et cetera. I know that the new vintages are accumulating lower spreads in your portfolio and you want also to do the risk. And this will be highly depending on funding adjustments. Is this a correct observation or maybe in terms of pricing you might be more aggressive. I just want to be a bit more comfortable when it comes to client NII given the industry challenges and recent history.

Pedro, thank you for your question. It's a pleasure to see you. Andrea will start answering your questions and then both of us will jump in.

I would like to highlight a few efficiency measures that we adopted when it comes to managing our liability. And this is reducing our cost of funding. When there is increases in the SELIC rate, we make more money. I mean this is a process that is ongoing. So all we have to do is accelerate with the deterioration of the macro scenario. We compensate that with efficiency measures so that our client NII can improve and we gain about two percentage points in the client NII segment. This is a very important point. The second important aspect that was even highlighted in the coupon minutes is that the central bank in terms of banking loans, they see deceleration in lines with lower spreads. And these are lines with longer duration where the effect of the monetary policy has an initial impact. So when you decelerate lines with lower spread, the demand goes to lines with better spread. So naturally there is a change in the mix. This helps to recover spread. So that 8.4% number that you see, that's where we see increases throughout 2025.

Pedro, again, well, good morning and thank you for your question. It's also important, if I comment on your answer. I mean personalization is something that has been our focus and this has to do with repricing. This component in addition to the inventory of 2024, which is quite healthy is what will set the base for higher growth in client NII. And funding is quite important as well. And there are other important aspects. I mean, we are doing some important work in SME, cash management and all of that has brought good results to the bank. So it's just a set of three pillars, hyper personalization, pricing and better retention in terms of principality and the good vintage that we build up in 2024. All of these things combined allow us to reach better client NII levels. I would just like to add one more thing. First of all, we have to carry over, right, for 2025, since there was that accumulation. NIM could fluctuate, but NII will continue to grow as we saw quarter-on-quarter, even for this capacity of production that we have in these different lines. Even if the spreads are lower, but the level of return risk adjusted return is much higher. That was a much better level to be. And portfolios with longer term like these programs FGI, FGO, there is stability and the loss level is low and under control. Second of all, Andre said that our funding cost is coming down. And the third point is that we remunerate some clients that have deposits with us at a level that is nice for the client and very positive for us. So this combination of deposits and demand deposits, they grew a lot this year. And this is a result of what Cassiano just said and also a result of our activities. So we are growing funding at a low cost. And this also helps us in terms of our leverage, the end cost and the NII margin that you talked about. Therefore, we know that we will gradually grow and at the same time the absolute value will be higher. And as a consequence, I mean, this has to do with our bottom line. And the bottom line is NII, net of provisions. I mean NII will come in absolute terms and NIM is just the result of something that we are building, along the months.

So next question is from Yuri Fernandes.

Thank you, Andre. Thank you, everyone. I would like you to elaborate on your expense line. I mean what if something goes wrong? I think other analysts already ask about, cost of credit or cost of risk that could be a bit challenging or maybe not. Maybe the margin will not grow, I just want to understand if your expense line could be a buffer. It could be an adjustment line if you anticipate a more difficult year for some reason, or maybe you would delay some of your investments just to deliver the bottom line or whether the bank is committed to the investments or maybe if something goes wrong in the cost of credit or margin, if you will continue to pursue your expense line is a trade off with long-term.

It's a pleasure to talk to you again, Yuri. Well, the first decision, I mean, you were just laying down a hypothesis and we have to look at it in a very dynamic way. But it certainly depends on, okay, let's say there's a new pandemic coming, it's a new situation, but the macro scenario is slightly worse than what we envision. That's another situation, but our decision, even bringing it to that scenario referred to last quarter it was 70-30. Now we are working with 30 more cautious landscape. But I repeat it again, it's more cautious. But I am not pessimistic. On the contrary, I'm very optimistic. I'm very optimistic with what we are doing here. And obviously, I'm optimistic with the opportunities we see in the market. This payroll deductible loan that the government wants to promote with e-social and other companies already talked about that. And again, I say that this is an opportunity for all of us to grow depending on how they implement that, whether there is or there is no cap, so that we can adjust to that kind of risk. Therefore, I see great opportunities in this market. And then we decided that even with a more cautious scenario to apply a guidance. And coming from this more cautious scenario, we will not stop investing not even BRL0.01. And this will have an important impact in the next coming quarters in 2026 and 2027. And you will see that. You will see for yourself. Thank you. I would just like to add one more thing. I think expenses is something that could be broken down in two parts. One is investment we want to preserve because there is competitiveness gains in the mid and long range. And the other aspect is, there are other expenses, personnel expenses, admin expenses that grew below inflation of 4.8% total control. And here again we could be a bit more cautions, we are just reviewing more companies. Meaning there is always room to be more efficient in our expenses. So regardless of the macro scenario.

Thank you, Yuri. Next from Carlos Gomez-Lopez.

Okay, thank you very much. So, congratulations on the results. So, two questions. First, on the implementation of IFRS, could you revisit the logic why you have such a big impact on securities and why this seems to be quite idiosyncratic to Bradesco. We have not seen it in other institutions. It's a big amount, BRL8 billion. So we want to understand exactly why this happens. And second, earlier last year, you were mentioning 2026 as a year when we reach a normalized return. Is that still the goal that you will get there in 2026? And how would you define a normalized return? Thank you.

Cassiano, I think that you can start answering this question.

Well, thank you, Carlos. I will try to rephrase the previous answer to make it more clear. The movement of the new IFRS brought some differences for the organizations and some competitors even Itau yesterday mentioned that very similar to the move we had here. The first big move was regarding operational risk. We all knew about 0.20% and 4,966 brings us the possibility of adjustment in shareholders equity in terms of credit policies and PLL. What we did was an adjustment to the basic model that the central bank allocates. It's a tropicalization of the Brazilian Central bank in terms of PLL have a total of BRL2,990 million that we considered a debit of our net shareholders' equity. And this would lead to a reduction in our BIS of 0.27%. Given a decision by the central bank, this 0.27% was diluted along four years. So we had minus 0.20% due to reduction of operating risk 0.07% given the reclassification of the credit part BRL2,990 million and we also had a prerogative that other institutions also used which is the possibility of classifying our securities that had three or four classifications available for sale or to maturity or free to be traded to a new concept called amortized cost that adjusts financial instruments to the new categories of classifications according to the business model. In a nutshell, in the Banco, on January 1st 2025 we had a full adaptation to the rule 4,966 in IFRS. There was no change. I think that the other banks, given their explanatory notes used the same instruments that we included in our balance sheet.

And I will complement the answer. We are going to pursue and to deliver an ROE which is a lot better. But this is -- and we want to be under promising and over delivering. And it is probable that this will not be normalized by 2026. It might still be growing.

Next question from Eduardo Nishio, Genial.

Good morning, everyone, Andre, Noronha, Cassiano. I want to have a follow-up question regarding profitability, the scenario has changed a lot since you mentioned this return on shareholders activity, achieving your cost of capital, which has also been growing over time, given the macroeconomic scenario. So this the same idea, cost of capital now is close to perhaps 15%, 16%. So do you think that in 2026 you will achieve this kind of profitability? And my second question is regarding market NII. Market NII, you spoke about neutrality. I think that you mean you want to be closer to zero, not having a negative or positive result in 2025. So I would like to know what is your strategy regarding that line. In the coming years, not in 2025, but in 2026, 2027, would this line go back to a normalized level? And what would be this normalized level, in your opinion, what about your hedge strategy? How is this being implemented? Will you remain neutral to the SELIC rate in the coming years? And do you consider hedging your capital? Because that would be another possibility to help.

Nishio, thank you for the questions. It is a pleasure to see you here. I'll start answering the first part of the question and then I will I ask Cassiano to answer the second question. As regards, ROE higher than the cost of capital. You are correct. When we delivered our plan in February, we had a different horizon, cost of capital, which was lower. We don't say what our cost of capital is, but if we imagine that our cost of capital was around 14%, if we get all of the variables we have today, it is above 15%. Is this a bigger challenge? Yes, but we'll get there. And it is what I said earlier in the previous question. We will not promise anything, but we will deliver. So it's under promising and over delivering at the right time. We are advancing step-by-step, everything we said we were going to do, we delivered. Everything we said in the timeline, we are reaching that. So we'll get there. Cassiano?

Thank you, Marcelo. Thank you, Nishio. I think that you raised an important point. Indeed the market NII is perhaps the most difficult NII for us to forecast and to give a guidance for there are a number of variations. And as regards a neutrality concept, that is it, we see between zero and BRL1 billion. But let's remember Marcelo's inspiration. We have an important work. The trading gave us very significant result in Q3 and Q4. So we are working a lot to pursue gains. This is the essence of trading. We don't have a hedge policy which is open and dedicated and documented, but we do very important work every quarter considering fluctuations. And we do this kind of work in specific operations. So this is under the management of Roberto Paris. So we have clarity on that. We are much more neutral to market fluctuations and interest rates. We are now in a hiking cycle. We know where the hiking cycle is going. So overall, both capital and our ALM is analyzed in that context. We don't have an asset policy of hedge, but we have a policy of working daily in our operations, making some kind of hedge or protection or an operation against some specific flows. So, yes, we understand that zero to one is a good market, NII, in the year of high interest rates, although we want to bring in more. And in the future, we will have to see what is going to be the new normal. We wasted a lot of time, over time we lost. The tax, the tax was a very important instrument, it was the hedge of foreign capital. And we have to have a new neutrality. Last year we had excellent treasury results and that is an indicator of a much more normalized market NII, then in this year when we have an interest rate hiking cycle. So the level of 2024 should be the benchmark for us, Nishio, I think that this is what Cassiano saying. So this would be a reference for you as a bottom in a normalized condition. But thank you for the question.

Now turning to English, the next question comes from Tito Labarta from Goldman Sachs. Tito?

Hi. Good morning, guys. Thank you for the call and taking my question. I guess just more a couple of clarifications just to make sure I understood. One is on the restructuring charges, right? I mean you had BRL443 million this year, BRL570 million in 2023. Do you expect to have any more this year? Just want to understand how non-recurring these are or when do you think these restructuring charges go away. And then second question and sorry to ask again on capital. I just want to make sure that I understood. The 60 bps increase from the Resolution 4,966. I wasn't clear what drove the increase. Was that the reclassification of securities or just if you could just walk me through why there was an increase because I think expectations were it would be a bit more negative. So just to make sure I'm clear. Thank you

Yes, okay, Gomes.

Okay. Thank you. Tito. Good to see you again. To answer your first question, provisions for restructuring like you commented, it's focused. And the review of our footprint, not only there, but particularly there, because investments that we've been doing, as I said, are much higher than that. But how long it will last, I mean, it's a transformation. We said that our transformation will go from 2024 to 2028. It's not that it would start now and it ends in '28. I mean, we've been delivering lots of things and we will continue to deliver. We'll continue to invest. We have a lot of investment. There are a lot of things to do in 2025. We still have a lot to do in 2026. But as you go on that journey, we also capture efficiency. We increase productivity. Just like I said, when I talked about technology, we are increasing productivity and efficiency. And we managed to do that this year through new technologies, new format, a new team. Therefore, we continue to pursue that. And certainly, we will capture further benefits as the years go by '26 and '27 and so on. And I think Cassiano can talk about that 60 basis points when he talked about capital growth with the 4,966.

Thank you. Nice to meet you again. Let me try to clarify. Basically that 0.60 comes from the movement of securities. That's what I said in the previous answer. The reclassification of our securities for our very specific cost model for every operation model, that allowed us to get to that 0.60. But as a reminder, within that number, I have two negatives. From what I said, 0.20 comes from operating risk and 0.07 comes from the legislation of the adjustment and the shareholders equity of loan loss provision. So we had 12.7 in September, 12.4 for December 30 phase. Also according to MTM. So on January 1st, our BIS ratio was adjusted. So this 0.60 from the adjusted adjustment comes from mark-to-market or the cost utilized. This is something that is very regulated according to the 4,966 and the new IFRS. That's where this positive difference comes from.

So now we conclude our Q&A session. The questions that were not answered, our IR team will certainly answer them right after this. The presentation is available in our IR website, this presentation, other earnings releases, and other presentations. So now I turn the floor to Marcelo to conclude this presentation.

Thank you. Andre. Thank you, Cassiano and thank all of you who worked with us. And thank you to analysts that spent time with us and joined us in this earnings release call for the fourth quarter of 2024 and the full year. We are certainly open to talk to sell side, buy side and any other investor that seeks for further clarification. And once again, I must say that we are pursuing a very cautious view, but we remain optimistic in terms of what you're doing and what could be the next prospective scenario for Brazil. So I wish you a very good weekend. Thank you.